Divorce / Shared ownership mortgage / Debt

[R0llonspring]

I am trying to help a friend who doesn’t have much money for a solicitor.

She is originally from the EU and has been living in the UK for 18 years, her DS14 lives with her.

She got divorced 9 years ago, Exh returned and has been permanently living in their EU country for about 3 years. They have minimal contact, she previously had a non molestation order against him in the UK, he’s a very unpleasant and obstructive person to deal with.

The mortgage on the flat she lives in with DS is still in their joint names (it’s a shared ownership flat), they jointly own 35% of it. Since their divorce, from February 2013, she has taken over paying the mortgage and rental/service charges in full. She doesn’t earn enough to get a mortgage in just her name on her own salary, but can meet the current payments, even with the multiple recent increases, (it’s a tracker.) She has never defaulted on a payment.

She has recently found out Exh has 1) remarried and 2) left some sizable business debts behind in the UK and possibly has accumulated some where he is resident now and 3) for 15 months has only paid half of the (already meagre) maintenance payments he pays for DS. Exh seems to be struggling for money.

She can’t really afford a solicitor, she’s working full time and receives Universal credit, but our understanding is - this problem is not categorised as being serious enough to qualify for free legal help. But I’m not sure if that is correct?

She is extremely anxious about whether her Exh and his new wife can make a claim on the flat and force her to sell, either now or when DS turns 18.

Do you have any advice as to how she can protect herself here?

And when they do come to sell their flat in the future, will it be taken into account that she paid the mortgage, rent and service charge solely for all these years? And if so, could she be entitled to a slightly larger % of the equity than him?

Can she protect herself in case the debt collectors come for their flat?

Any advice would be much appreciated.

If she divorced him, he cannot now make any financial claims against her. If he divorced her and there was no financial order at the time, he may be able to make a claim.

If there was a financial order that set out what would happen when the flat was sold, that still applies and cannot be varied.

She can protect herself against his creditors by applying for a property adjustment order and registering her claim at the land registry as a pending action.

If they both own the flat, they both own the equity. And that's only fair if his name is still on the mortgage (although granted if he's in the EU now that probably hasn't prevented him getting another one). How unpleasant he is unfortunately doesn't change that. Nor does who has been paying the mortgage. This is an area of divorce that is really poorly understood so I'll try and explain.

In more conventional cases within the UK, if someone has been prevented from getting a mortgage because their name is on one with their ex-partner or spouse, then to all intents and purposes that ex has been using their borrowing power to make an investment. If someone borrowed £200k in your name and at your risk, preventing you from borrowing money yourself, to invest in stocks and shares you'd probably want a cut of any return. It's exactly the same principle at play here. Also, the person locked out of their capital loses money renting. The way this is compensated is that the person in the FMH pays all of the mortgage but then has to share the equity at the end of the order.

If this did not happen, consider the implications. Person A gets to live in the FMH. The mortgage is £1k a month and might increase with interest rates but is likely to stay fairly static. Approximately half of it is equity accrued for their benefit. Person B can't buy themselves because person A is using their mortgage capacity. They have to rent at a cost of £1.2k and this amount is likely to rise at least with inflation every year. They accrue no equity from paying it. They also constantly run the risk if Person A defaults that they will have to pay the mortgage or have their credit rating trashed or worse. The only fair thing a court can do in these situations is to have the equity split 50/50 when the youngest child is 18.

I disagree with the above analysis. On divorce the court has a wide discretion. Where there is a child left to one spouse to bring up on their own (and there appears to be no suggestion father is paying maintenance - or that he is prevented from getting a mortgage in his home country) I would expect the moither to receive an enhanced share of the proceeds.

Beyond that she will have to seek her own legal advice.

Was there a financial settlement when they divorced?

If there was no financial settlement signed off by court then yes in theory he can make a claim. How the courts view it I don't know.

As per my earlier post, he may have lost the right to make a claim as he has remarried.

Surely he should be removed from the mortgage! Should the friend contact the lender? If she can pay, that’s surely ok? Or extend the term of the loan?

My analysis is more general rather than specific to the circumstances. Some departure from equality is possible but I'd be reluctant to speculate based on the limited information available.

Relying on the father not being able to apply to court for a property adjustment order won't prevent him applying for an order for sale, or his creditors getting a charging order on his half followed by an order for sale.

Thank you very much for all your responses, it’s been extremely helpful.

Apologies - the key information I forgot to include in my op is that since they got married in their EU country, they chose to get divorced there too, because it was in their first language. I imagine this changes things since she is resident in the UK, but don’t know how.

However your advice has helped me see we need to start with what was agreed in their divorce.

• We will check her divorce agreement to find out if there was a financial order/settlement/reference to the flat/maintenance.
• I’ll ask her to look into applying for a property adjustment order.
• I’m afraid she can’t remove him from the mortgage because she doesn’t earn enough to get a new mortgage on her own. We’ve explored this with a professional mortgage advisor, (whom I know very well) and sadly had to discount it. I will encourage her to contact her lender though to see if they can help, I agree the fact she has managed the payments alone for 9 years might mean they view her more favourably, but the advisor thought it was unlikely.
• She is going to ring CAB to see if they can recommend a solicitor who might see her for free for an initial consultation and take it from there.

I know nothing about law, so thank you for taking the time to reply, I’m very grateful.

I guess she really needs to understand that she’s paid his share of the mortgage, and her own, for 9 years but has 50% of the asset as it stands. Clearly the finances need sorting out. Also what about the other equity holder? What are their rules/views? A Housing Association?

Yes I agree, she needs an adjustment to the way she sees it, I think she's understanding it more now.

From memory it's a Housing Association and they changed the rental into her sole name a few years ago when she provided them with her historical bank statements.