What is a property adjustment order?

Property adjustment order
A property adjustment order alters the ownership of the property.

What is a property adjustment order

Property adjustment orders are made in divorce or dissolution of civil partnership proceedings.

Examples of a this type of order are:

  • an order transferring property from joint names to one name;
  • an order that one person receives more than half of the value or equity on a sale; and
  • an order postponing a sale of a house perhaps until children have left home.

A property adjustment order is usually made in connection with a house or property that a couple owns, but it’s also possible to have property adjustment orders in relation to rented property. For example, an order for transfer of tenancy. This is often used in connection with local authority housing. 

Other property

Whilst property is usually something tangible, it doesn’t have to mean somewhere you live. It can refer to anything you own, like a house, shares or savings or even a pet. 

It doesn’t have to be of financial value. It could be something sentimental like a letter or a photograph.

It can also be something less tangible, like the future benefits of a share save scheme, for example.

Types of property adjustment order

There are two main types of property adjustment order;

  • an order to transfer ownership of the property;and
  • an order to create or adjust a trust over property.

This second type of order is referred to in the legislation as “settlement” of property and I will talk a little more about that below.

Transfer of property order

A transfer of property order is a type of property adjustment order.

It is simply an order to transfer ownership or benefit of part or all of “property” from one spouse/civil partner to the other.

Settlement of property and trusts

Property is “settled” when there is an agreement about the circumstances in which it can be sold, who is to receive any proceeds of a sale and (if it is a home) who is to live in it and pay the bills and so on in the meantime.

We usually call this type of agreement a declaration of trust. Declarations of trust don’t have to be in writing but I strongly recommend that they are in fact written down to avoid disputes in the future. 

Written agreements or written declarations of trust are known as “deeds of trust” because they have to be drawn up in a particular way, called a deed.

Deeds are always intended to be legally binding.

A property adjustment order can

  • create a trust over property; and or
  • transfer the benefits of a trust, that may already exist, between spouses/civil partners.

This type of property adjustment order is more common when there are children and the family home is not going to be sold until they grow up.

The court order will say what is to happen to the proceeds of sale and when the house will go on the market etc.

Stamp duty

From 1 April 2016 anyone buying a home who is already registered as an owner of another property must pay additional stamp duty.

In the 2017 budget the Chancellor introduced a new exemption to additional stamp duty for couples who are divorced or who have dissolved their civil partnership. This exemption will apply if they have obtained a property adjustment order.

You can read more about this here in our article specifically about property adjustment orders and stamp duty.

If you would like to know more, please get in touch. 

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