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divorce?
Wednesday 3 August 2022
A Property Adjustment Order is a legally binding order made by the court under s24
Matrimonial Causes Act 1973 (MCA 1973) that addresses spouses’ property rights and is
one of many orders a court can make in respect of spouses’ matrimonial assets. There is
similar provision made in respect of the dissolution of a civil partnership under Schedule
5 Civil Partnership Act 2004.
This type of financial order can dictate a transfer of the property either from joint names
into one person’s sole name or from one separated person to another; settlement of
property, for example, determining who should retain and use the property for the
benefit of a child during their minority; and can vary a pre or post nuptial agreement
(s24(1)(c) MCA 1973) in the case of marriage.
A lump sum order is a separate and additional order to a property adjustment order. To
protect both people should either person seek to depart from their informal agreement
or in the case of a failure by one person to cooperate with the agreement, in order to
enforce the property transfer and/or payment of lump sum, these orders will require a
timescale for completion which will be included within the financial order.
For certainty, peace of mind and to dismiss the potential for your former spouse/partner
to apply for financial provision in the future, separated couples are advised to deal with
division of their matrimonial/partnership assets in a timely manner following separation
and to obtain a financial order from the court which, in the case of allocation of
property, will include a property adjustment order.
In addition to a property adjustment order, therefore, the court has the power to make
other financial orders, including periodical payments order, secured periodical payments
order, a lump sum order and a pension sharing order or pension attachment order.
Quite often financial orders will contain a number of these orders to ensure regulation
of all of the matrimonial/partnership assets, with the aim of there being a full and final
settlement and to avoid any future dispute.
One person (or both people if making a joint divorce application) will need to apply to
the court for a divorce/dissolution. Once the divorce/dissolution proceedings are in
existence, with the exception of an interim periodical payments order, known as
‘maintenance pending suit’, the divorce/dissolution proceedings will need to be
progressed up to the pronouncement of the conditional order (previously known as
decree nisi) before the court is able to make a financial order.
When there is an agreed position, the agreed terms of settlement are incorporated into
a financial consent order, usually drafted by the applicant’s lawyer, and submitted to
the court with a supporting statement of information detailing both the financial
positions of the couple, for approval by the court.
In the case of marriage, applying the s25 MCA 1973 factors, the court is obliged to
consider the separated couple’s respective financial resources and, importantly, the
couple’s needs and those of any financially dependent children. Whilst it may be one
person’s desire to retain the former family home, it is not always possible to achieve this
if, when considering all the s25 factors and all the circumstances of the case, this would
leave one person’s financial/housing needs unmet.
The court could determine, therefore, that there must be sale of the property, which can
be immediate or deferred to a later date depending on the circumstances of the case.
Whether a sale of the former family home is agreed or imposed by the court, it is
appropriate for the financial order to contain and order for sale. This will determine, to
eliminate any implementation dispute, who should market the property for sale, whom
should have conduct of the sale and how the proceeds of sale should be applied, to
include payment of lawyers and estate agents’ costs of sale. The order will specify a
timescale for the sale and how the net proceeds of sale should be divided between the
separated couple.
It is important for separated couples to note that unless and until the court makes an
order dismissing the potential for either person to make a claim against the other
relating to the marriage/civil partnership, those potential financial claims will remain live
even after the marriage/civil partnership has been dissolved by way of a final order.
Obtaining specialist advice early following a separation can be invaluable in
understanding both the necessary practical considerations to best safeguard your
position and the court’s approach to division of matrimonial/partnership assets.
If you have any queries about property adjustment orders, or any other aspect of a
divorce or civil partnership dissolution, please contact a member of our Family Law
Team.