Mesher Orders – Should I get one?
When marriages breakdown and couples divorce, there are a number of important financial matters to sort out, including how assets will be divided; how children will be cared for and supported and what should happen to the former marital home.
For many, the biggest problem to solve is “How do we fund two households, when beforehand we only had to fund the one?”
In many cases one of the parties cannot afford to remortgage in their own name, cannot buy the other party out, or perhaps they just want the children to stay living in their current home until they older, to provide some stability.
When this occurs you can agree for the former marital home to be sold at a later date – usually when the children have grown up.
There are also some potential drawbacks to using a Mesher Order, so it is important to be aware of how they work and the various issues involved before relying on this option to deal with your family home following divorce.
What exactly is a Mesher Order?
Mesher Orders are one way in which a judge and the divorcing couple can deal with a property when an immediate sale of the property or a transfer of equity to one party is not practical. They take their name from the case where this type of Order was first granted, which involved a divorcing couple named Mesher.
Sometimes also referred to as an ‘order for deferred sale’, a Mesher Order allows the sale of the family home to be postponed for a certain period of time or until a particular trigger event happens.
Common trigger events might be when the person living in the family home enters a new relationship and decides to cohabit with their new partner or to remarry; when children are old enough to have finished their full-time education or it can be a set date, agreed between the two parties.
Under the terms of the Mesher Order, the property will remain in the divorced couple’s joint names, on trust for sale, until a point in time when a trigger event occurs and the property can be sold and the proceeds of sale, divided.
Alternatively, the property can be transferred to the occupying ex, who is still living in the house and the non-occupying ex, who has moved out, will have a charge on the house, sometimes referred to as a ‘chargeback’.
What is the difference between a Mesher Order and a Martin Order?
A Martin Order is similar to a Mesher Order in that it applies to divorcing couples who have no children, where one party wishes to postpone the sale of the property in order to carry on living in the marital home.
How do I apply for a Mesher Order?
If you and your ex can agree a financial settlement, then your can draft the financial agreement into an Order which is then sent to court for approval. The Order is then given by a judge and will come with various conditions.
If you and your ex cannot agree a financial settlement, then one of you would need to make an application to the court for a Financial Order where court proceeding would follow and the final Court Order being made at the end of the court proceedings. You will usually need to have at least considered family mediation by way of a MIAM in order to make such an application.
What are the benefits of a Mesher Order?
How a Mesher Order could be an option for you and your family
A Mesher Order may be worth considering if you are opting for an amicable settlement and wish to stay in the family home with your children, but are unable to meet your monthly payments or get a mortgage on your own.
In these circumstances, a Mesher Order will enable both you and your former spouse to remain on the mortgage. Whilst your ex may agree to pay you maintenance, having a Mesher Order does not necessarily mean that your ex will still have to contribute to the mortgage repayments. This will need to be discussed and agreed beforehand.
In many instances, a Mesher Order may be the best way to meet the immediate housing requirements of you and your children, which will always be the main focus and consideration of courts when deciding what should happen to your assets and property during a divorce.
Advantages of a Mesher Order can include:
- Avoiding the need to immediately sell your family home, helping you to avoid the added disruption and stress of moving house during the emotional impact of a family break-up.
- Putting the welfare of your children first, protecting their best interests and minimising stress and disruption to their lives by allowing them to remain in the same home and school environment.
- Creating a stable home environment for yourself and your children whilst they still under the age of 18 or in full time education.
- Securing a home where downsizing or buying another property is not possible or will prove too costly because another mortgage may not be on the same favourable terms.
- Avoiding the circumstances of negative equity by delaying the sale of the property until a more favourable economic and financial situation would make a sale worthwhile.
- Allows both parties to stay on the property ladder as you both maintain equity in the house.
What are the drawbacks of a Mesher Order?
Why postponing the sale of your family home can be a bad idea
While Mesher Orders can be a way of securing your current living arrangements for you and your children in the short term, this might not be the best long term solution for you, financially.
There are several drawbacks to both Mesher Orders and Martin Orders because they keep you financially tied to your ex. In many cases, it might be better for you to have a clean break, from the outset, so you can both move forward with your lives independently of each other.
For example, if you are the one who has moved out, your share of the capital is still tied up in a property, that you no longer live in, making it harder for you to move on and purchase another property.
If you are the one still living in the marital home, you will still have to sell your property, at some point in the future, even if that isn’t what you want to do. When the time does come to sell, what position are you likely to be in? Will you have enough capital to buy another property? Will you be able to get another mortgage?
The person who remains in the family home can often find that, when they eventually come to sell, they are not left with sufficient capital to buy a new home. They may also struggle to secure another mortgage if they wait until later in their life to sell, as lenders will consider how many working years you are likely to have remaining before deciding whether to lend to you .
It is also worth noting that if, either you or your ex are considering using the property as a long term investment, hoping for a windfall on the sale, you may be hit with capital gains tax liabilities on receiving your pay-out.
Disadvantages of a Mesher Order include:
- The continued threat of uncertainty in the future as your marital home will still have to be sold at some point later on.
- It is unlikely you will be able to secure a mortgage on a second property for yourself.
- You are still liable under your mortgage contract for 100% of the payments, if the other party stops paying the mortgage as agreed.
- Not having enough capital when the property is eventually sold for both you and your ex to each purchase another property.
- Having your capital tied up for a significant number of years.
- Having a reduced future mortgage capacity because of your increased age and reduced working life at the point when your property is eventually sold.
- A capital gains tax liability if you are the non-occupying ex and you have already bought another property which you have used as your principal residence.
- Having to be tied to your ex for longer than you might like, especially if your relationship is difficult and acrimonious.
- Having to be in communication and dialogue with your ex over the matrimonial home for issues relating to mortgages, insurance and repairs.
- Financial matters such as if you or your ex are facing potential bankruptcy which could then trigger an early sale by the Trustee in Bankruptcy
It is advisable to give very careful consideration to all of the above factors when deciding whether a Mesher Order is appropriate for your individual situation and the best way forward for you personally, legally and financially.
It is always a good idea to seek formal, professional legal advice from a qualified solicitor who will be able to advise you of all of the potential options and outcomes that will be available to you and establish what best suits your particular circumstances and whether a Mesher Order is the right option for you.
What alternatives are there to a Mesher Order?
Other options you might want to consider…
Perhaps you would be better off negotiating for all the equity in the property so that you can finance another home for your family sooner rather than later?
Would you be better off holding out for a Transfer of Property Order, giving you all the equity in the house?
Mesher Orders maybe just one of the many options available to you and it is certainly prudent to think about the full scope of options that may be better suited to your circumstances with your solicitor. Other Orders which are available to a judge include, Child Maintenance, Spousal Maintenance, Lump Sum Order and Transfer of Property Orders.
See our guide “10 Options for Your Property on Divorce or Separation” for other options that you may not have considered but that may work better for your individual situation.
What do we need to consider if looking at getting a Mesher Order?
- When will the property be sold?
- Who will pay the mortgage and for how long?
- Determining events for the house to be sold beforehand, such as re-marriage
- Who will pay for maintenance of the property and in what percentage?
- How will the equity be shared on sale
- If the mortgage is capital & repayment how will this be factored in?
- Who will ensure the property is fully insured?
Example of a Mesher Order
Eva and Jack are divorcing. They have 2 children together, a girl aged 11 and boy aged 9. They own a 4-bedroom house together and both are on the mortgage. Eva works 3 days per week and, with her child benefit and tax credits, earns £18,000 pa. Jack works full time and earns £42,000 pa. They are now divorcing.
They know that Eva and the children’s needs are for a 3 bedroom house. But if they sold their current property they would need all the equity to put towards a 3-bedroom place. It makes more sense to keep the children where they are. The details of the house are:
Value: £500,000
Mortgage: £200,000
Equity: £300,000
Eva has checked and cannot borrow £200,000 on her income, let alone borrow any more to buy Jack out as well. But she feels she can cover the mortgage cost herself, especially is she reverts to an interest only mortgage. Jack rents a 2-bedroom place locally. The children stay with him every other weekend and more in the school holidays.
They agree a Mesher Order for the house to be sold when their son reaches the age of 18, in just under nine years. They agree that when sold, the equity in the house will be divided 55% to Eva and 45% to Jack; that Eva will pay for any ongoing maintenance of the house and will be responsible for keeping it insured and making the mortgage payments.
They have the order drafted along with their other financial arrangements into a Consent Order by their solicitor and this is sent to the court, once their conditional divorce has been agreed.
Common Questions:
How do we agree a Mesher Order?
You can agree a Mesher Order between yourselves, through family mediation or any one of the other 11 options to resolve an issue on divorce or separation. The more you can agree yourselves, the less expensive your divorce will be. See our blog here for advice on saving money during your divorce.
What are the common determining events?
Determining events are those events listed in the order that would mean the property is sold sooner than the agreed timescale. These are the common reason why
- Both parties agree to the earlier sale
- The youngest child reaches the age of 18 or finishes full time education. Or the child no longer lives with the parent staying in the house.
- Death of the children or person staying in the former home.
- The remarriage of the person staying in the home or perhaps, cohabiting with another person for six months or longer
- Failed to occupy the house for an agreed period of months in any 12-month period
- Failed to occupy the property as their main residence
What if we both agree we want to extend the sale date?
That’s fine, as long as you are both in agreement you can extend the Mesher Order, without having to return to court. For example the children may have gone onto university and you want them to keep the home as a base for them. If both parties agree, you can of course do this. If one of you doesn’t agree, then the existing order would stand.
What if the person occupying the property wants to buy out their ex sooner?
They can usually buy out their ex at any point. Perhaps if their employment circumstances change, increasing the amount they can borrow on a mortgage, or if they can get a mortgage with a new partner.
What if I want to move house when there is a Mesher Order on my existing property?
This can get complicated and you should take independent legal advice. But you can port the Mesher Order across to any new property by agreement and this can be included in the original Mesher Order as an option.
Do I need a separate Court Order to get a Mesher Order?
No, it is included in your Financial Consent Order.
Can we get a Mesher Order if we have children, but are not married?
No unfortunately co-habiting couples have different rights to married couples. The property in such cases falls under a different area of law. You should take legal advice on your situation if you are worried about what to do with the family home when you separate as an unmarried couple.
Summary
A Mesher Order can be a great option to help prioritise housing the children when circumstances do not allow for two separate households to be purchased. It allows both parties to stay on the property ladder, even when one of them is renting separate accommodation.
But they do come with their drawbacks, such a no clean break financially until the Mesher Order ends; it is more difficult and expensive for the party not living in the house to get a mortgage and if they are able to purchase their own property, there is likely to be capital gains implications (as you will then own two properties). It is therefore important that both of you are aware of the implications of making such an order for your situation, both now and longer term. Good legal advice and financial advice can be particularly helpful here.
If you are struggling to reach an agreement on a Mesher Order; want to agree a Mesher Order as part of your divorce, or just want to look at all your options on what to do with your property when you separate, then family mediation can help.
Mediate UK are a multi award-winning family mediation service. We can help with fixed fee mediated and consent order packages (when you don’t have an agreement between you) or fixed fee facilitation and consent order packages (when you have an agreement in principal) – and our legal paperwork is always drafted by our highly experienced family law solicitors.
Call us today on 0330 999 0959 or email admin@mediateuk.co.uk to find out more or book in a FREE 15-minute consultation with one of our team.
