Property adjustment order | stamp duty on divorce | what is it and how do I get one?

Property adjustment order and stamp duty

Since the recent budget it is essential to know more about the term property adjustment order and stamp duty when getting a divorce.

A property adjustment order is an order made on divorce, judicial separation  or civil partnership dissolution in connection with property.

It can be an order to transfer property from one person in the couple to the other or (more rarely) to the children.

Alternatively it can be an order to “settle” property or adjust an existing settlement.

A settled property is one where there is an agreement about the circumstances in which it can be sold, who is to receive any proceeds of a sale and who is to live in it and pay the bills and so on in the meantime.

These agreements don’t have to be in writing. However, it is strongly recommended that they are written down to avoid disputes in the future.  Written agreements of this type are known as “deeds” and have to be drawn up in a particular way.

So why property adjustment order and stamp duty? In the last budget the chancellor announced changes to the stamp duty rules for couples going through divorce that will help in situations where selling the family home is not an option or not desired but the departing spouse or civil partner needs to buy him/herself a new home.

Cost of getting a divorce is rising – but why?

As reported in the Independent, Aviva has publised research this week on the cost of divorce.

The headline findings reveal that divorce is taking around 3 months longer to conclude than in 2014 and the average legal cost has doubled from £1280 to £2679.

That may not be so surprising as the court service has increased its fee for starting a divorce from £410 to £550 and some inflation in the cost of advice is also to be expected as law firms’ overheads have risen in that time.

However, the real cost increase is in finding alternative housing. If you want to keep the cost of rehousing down you need to be aware of the impact of a property adjustment order and stamp duty.

Property adjustment order and stamp duty on divorce

During the period of this research additional stamp duty was introduced on second homes bought by married couples. This has meant that many separating couples have paid additional stamp duty on properties they have bought (even in their sole names) whilst still married but separating, if they still owned a share in the family home.

property adjustment order and stamp duty
separating couples have paid additional stamp duty on properties they have bought (even in their sole names) whilst still married but separating, if they still owned a share in the family home.

The higher and additional rates of stamp duty and when they apply are complicated. However, it all generally focuses on whether you are formally separated or divorced and, if you are,  whether you will end up owning one house each or retain one in joint names and buy another for the departing spouse/civil partner to live in.

The chancellor made amendments to the rules in his last budget which make life a little easier for those going through divorce straightaway.

Under the new rules, if one half of a couple needs to buy a new property after divorce/dissolution of civil partnership, it will not necessarily be treated as a second home provided that there is a court order (a property adjustment order) to regulate the ownership of the jointly owned family home moving forwards. In other words, get a property adjustment order and stamp duty may not apply.

Property adjustment order by consent (consent order)

Not all court orders require couples to be at war to obtain one.

Most divorcing couples reach agreement about their financial arrangements following separation and divorce. Some don’t need any help from lawyers to do so.

However, they will need help converting that agreement into a court order by consent (known as a consent order).

However you reach agreement, it is always a good idea to write it down in a clear way to avoid future disputes. It is absolutely essential to take professional advice before purchasing a new home to make sure that you understand the options open to you and the tax implications of each.

This is especially the case if one of you is going to stay in the family home for a while, perhaps until the children have grown up.

For more information on my consent order service generally please see my consent order factsheet. 

Divorce costs

Unless you qualify for partial or total exemption from paying court fees, the court costs associated with an amicable divorce are:

Petition issue fee: £550 (correct as at 11 January 2018)

Consent order fee: £50 (correct as at 11 January 2018)

If you need help preparing the divorce paperwork you will need to pay a solicitor to help you. The cost for this varies enormously and you will need to shop around to find the right service for you at a price you can afford.

My fees for preparation of a consent order start at £180 for a straightforward agreement.

Contact me using my fee enquiry form for more details.

 

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Form A where do you find one, who fills it in and what does it do?

Form A

In a nutshell, Form A is the form that needs to be filled in to apply for a financial remedy in a divorce. It ‘s a standard court form and can be downloaded from the court website here.

This is what it looks like. Its official title is a notice of (intention to proceed with) an application for a financial order.

Form A

Is there a separate form A for a financial remedy order by consent (a consent order)?

No.

The same form is used whether you are applying for an order by consent or not.

Form A and MIAM

Over the years the Form A has evolved from a single page form to a 10 page form. This is because all applicants for a financial remedy on divorce now need to attend a MIAM (mediation information and assessment meeting) unless they are either:

  • exempt; or
  • the terms of their application and the order being sought are agreed (this is known as an application for a consent order).

The extra pages now contain numerous questions about mediation or the reasons you are exempt from the requirement to attend a MIAM, such as being in a violent relationship. Continue reading “Form A where do you find one, who fills it in and what does it do?”

What is a fair  consent order?

Agreeing the terms of a fair consent order isn’t always easy. So where do you begin?

Most people start by typing queries into a search engine. Any why not? It’s where we go to find out pretty much everything these days; whether it’s keeping up on the news, checking reviews on where to go for dinner on holiday or finding the best price for a new TV. Almost all of us will at some point turn to the huge source of free information that is the internet.

divorce advice online

The problem I find, is that there is often just too much information out there and it’s getting harder to tell not just what is true, but also what experience and skill the author/website owner has.

There are other options to help you determine what is a fair consent order.

  • You can ignore all advice and rely on your own instincts.
  • You can rely on the advice of family and friends to guide you.
  • You can go to a regulated family law mediation service.
  • You can seek bespoke help from a family law solicitor or barrister.

But in the end, the consent order will only be made if the judge thinks it is fair too.

So, I want to look at what the law says needs to be taken into account by a judge when he or she has to make that decision on what is a fair consent order. Continue reading “”

application relating to land
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When do you need to tell your mortgage lender you are applying for a financial remedy order (even a consent order)?

You must inform your mortgage lender when you are making an application for a financial remedy order and it is an application relating to land.

This applies to consent orders and applications that are not by consent.

In the case of a consent order,  you must inform them at least two weeks before sending a consent order to the court.

In other cases (not by consent) you should do it at the time you issue your application.

What is an application relating to land?

This is any application relating to land itself or to a house/property on any land.

So an application relating to land may mean an application for:

  • a transfer of property from joint names to one name;
  • an order for the sale of the property;
  • a mesher order.

Continue reading “”

Can a consent order be changed?

court consent order
There are times when you may find that you need to change the terms of a consent order by agreement.

For example, you have a consent order for the sale of the family home and now in fact you want to transfer it from joint names to one name instead.

Do you need to change the consent order itself or can you just go ahead and transfer the property?

The answer lies in the detail of the order. Continue reading “Can a consent order be changed?”

Can I send in a consent order without the agreement of my husband/wife?

The answer to this is no, I’m afraid not.

A consent order is a legally binding agreement.

It requires the agreement of both parties to the marriage/civil partnership and the approval of the court.

Both you and your husband/wife/civil partner will need to sign all the forms including the Form A, the D81 and the order itself. Continue reading “Can I send in a consent order without the agreement of my husband/wife?”

Can I download a consent order form from the court website?

You can’t download a consent order from the court website. So, you need to draft one (or arrange for a solicitor or barrister to draft one for you). A consent order needs to fit your requirements perfectly. One size doesn’t fit all.

What goes into a consent order?

The court only accepts court orders prepared in an approved format. This is usually best done by a solicitor who specialises in this type of family law.

consent order precedents

I use court approved precedents like these produced by Resolution the Solicitors Family Law Association for its members. Continue reading “Can I download a consent order form from the court website?”

When do I use the form A application for a financial order?

This form can be downloaded from the court service website here

It is used to start an application for a financial order on divorce – whether that is for a consent order or not.

It is a long form and not very user-friendly.

We supply a completed form with both our clean break consent order service   and our standard consent order service

Missing property box on Form A?

The form A application for a financial order asks for the address of any property which is the subject of an application for a property adjustment order to be inserted “in the box below”.

There are two issues with this.

First of all as you will see to the left, there isn’t a box.

Secondly there isn’t always a property even when this box has been ticked. Why not? Well it’s because you may just be asking the court to dismiss future claims rather than make an order now.

And yet I have today heard of Southampton divorce centre sending back a consent application because the property address was not filled in, in the box that isn’t there.

There are currently delays of 4-6 weeks to have post looked at, I understand, at Southampton and so it is pretty frustrating when this happens.

It is my understanding that all consent orders are supposed to be considered by a District Judge not an unqualified member of court staff. How realistic this is in the long term I don’t know. I don’t know how many District Judges they have moved to each centre. But given that there were county courts (many with several District Judges sitting in one place) in 92 towns and cities and now there are only 11 divorce centres, which have over the last few months started receiving all new divorce applications, the caseload will surely be too great.

They won’t be dealing with contested cases but, whilst we may have the impression from the media that all divorces end up in court, the opposite is in fact true. Every year the number of consent orders approved by the court service is more than double those which are initially contested and ten times the number which actually go to trial.

So it seems obvious that as the months go by the new divorce centres, which are now handling all routine consent orders, are going to have their work cut out.

It seem equally clear that not all consent orders can or will pass directly to the District Judges. There will presumably have to be preliminary checking – which I understand will, in the long run, speed up the process. But this is where I think there is much work still to be done at HMCTS. Newly trained but still inexperienced staff are dealing with forms which, let’s be honest, are barely fit for purpose.

Take the Form A. Somewhere in the transition from a single page form to a 13 page form (10 of which are entirely unnecessary for a consent order) things seem to have become muddled. When I read the statistics about 40% of all divorce forms being rejected because they are incorrectly filled in I wonder what else can be expected, when the forms are so poorly set out and the “notes for guidance” do anything but guide.

Please HMCTS can you give the box back if you want it to be filled in rather than just reject the forms, and please,please whilst you’re at it, can we have a single page form A for consent orders?

I advise anyone submitting a consent order over the next few months to be patient because things could get a lot slower before they begin to improve.

 

 

 

All I want is a clean break. Can we transfer the house first?

iStock_000008511772XSmall - houseThis is one of the most common questions I am asked.

Best practice is to have the order first and I will try to explain why.

Let’s take a typical example:

Mr and Mrs Williams are getting a divorce. They’ve been separated for a while and they’ve agreed that Mr Williams will stay in the family home and buy out his wife. He has been to a financial adviser and applied for a mortgage. The value of the house and the amount he is paying to his wife has been agreed.

All is going to plan and the couple are reasonably amicable. They both want to draw a line under their finances after the transaction has completed and they know that the best way to do this is to have a consent order in which there will be “clean break” clauses.

This type of order means that there can be no further claims for more money or property between each of them in the future, even after either of them dies.

But, in order to obtain the order, not only do Mr and Mrs Williams have to agree to the terms, the District Judge has to agree that the terms are fair to them both as well. Continue reading “All I want is a clean break. Can we transfer the house first?”