Here for you: Please note that Brookman’s services remain uninterrupted during this time. Read more

What Happens If Our House Value Changes During Divorce?

Date: August 12th, 2020 - Written by: Brookman Solicitors

 

Whether you are attempting to negotiate a financial settlement voluntarily or you are embarking on legal proceedings to secure a divorce settlement, there’ll always be a degree of uncertainty about the final outcome.

Experienced family law solicitors can minimise the element of risk by analysing previous judicial reasoning, applying it to your situation and advising accordingly. But because each case depends on its particular facts you’ll never be completely sure what form the financial settlement will ultimately take. The certainty of a negotiated settlement that each side has agreed to is often preferable to the greater risk of going to court and relying on a judge to decide the financial outcome of your case.

Settlements will be based on house and other asset valuations made at a particular moment in time. Naturally the actual value will vary from time to time. But can such a variation – in the value of a house for example – lead to a divorce settlement being set aside?

 

Events beyond your control and financial settlements

External factors beyond the control of the parties inject a further element of uncertainty into financial settlement discussions. For example, what happens if the property market crashes during negotiations or shortly after a settlement has been reached? Or the stock market dips significantly so that the value of a pension or other matrimonial asset reduces considerably in value? Can a settlement be re opened? Or, if negotiations are ongoing can previously agreed house or stock valuations be re assessed?

The coronavirus pandemic in 2020 is another example that resulted in rapid and dramatic fluctuations in the property and stock markets. In a period of prolonged financial volatility is it possible to look again at already-agreed financial settlements?  From a legal perspective everything depends on the nature of the external event that has caused a change in your financial circumstances.

Let’s examine this further.

 

Can I object to my divorce settlement if the housing market crashes?

A spouse who agrees to buy the other’s share in the family home for £1million will understandably feel aggrieved if, shortly after the transfer is formalised the market crashes and the £1million share he or she has just purchased shrinks to, say £500,000. Would that spouse be in a position to ask the court to alter the arrangement so he or she can claw back some of the lost value?

Similarly what happens if a family business the value of which formed the basis of the divorce settlement is forced to close as a result of an event such as the Coronavirus pandemic of 2020?

The situation is exacerbated by the fact that very often one spouse will agree to take certain ‘safe’ assets such as the family home in the settlement while the other will opt to take on riskier assets such as shares or a business.

There are many obstacles to a successful application to set aside a financial order. After all, the court’s goal is to achieve finality when issuing a financial order. However in certain very limited circumstances it may be possible to ask the court to change an order that was made before some intervening event. The event relied on must be so significant that it fundamentally undermines the basis on which the settlement was originally reached. Such an event is known as a ‘Barder event’, following a case decided in 1987.

 

Does a market crash represent a Barder event that will enable me to set aside my divorce settlement?

To satisfy the Barder test an event must:

  • Invalidate the assumptions on which the financial order was made; and
  • Occur within a short period of time from the original order.

In addition:

  • The party wishing to change the order must apply to court as soon as possible after the event occurs; and
  • Any change to the order should not adversely affect a third party who has acquired property included in the order in good faith.

In a later case (Cornick) the court indicated that a Barder event must also be unforeseeable.

Historically, market crashes have not been considered ‘unforeseeable’. They have occurred regularly over the decades and are therefore fundamentally foreseeable, if unwelcome. Even an event such as a pandemic – not necessarily foreseeable in its own right – but the resulting market crashes could potentially be considered as foreseeable and so not be considered a Barder event. Obviously every case is different and you should always seek legal advice regarding your circumstances.

 

Contact us

At Brookman we can offer practical advice on your divorce settlement. We have  extensive experience of complex cases and a clear understanding of the approach taken by judges when dealing with any challenge to a financial settlement. Please call on 44 (0) 20 7430 8470 or contact us online.

 

 

Share:

Google Reviews

Brookman Solicitors

70 Reviews

Yesima Hamid 04/09/2020

I want to highly commend Brookman Solicitors firm. I had the privilege of getting very thorough and sensible advice from their solicitor Jennifer Douglas. I don't have enough praise for her. She made me feel at ease and 'got me' and understood very well all the issues and her advice was on point. I felt she had my interest at heart in all the different matters. She was very accommodating and willing. She truly made a difference. She has great insight and I truly recommend her and the firm. They are very professional with the human touch.

Roohie Mahajan 16/08/2020

I am so happy that I hired their services. I am from India and it was my international divorce case. My ex husband is in the UK. I had a free telephone conversation with Henry Brookman and I was so satisfied that without even meeting him I was so confident. My case was handled in the best way possible.

He is probably the one of the best lawyers in the world. He is extremely competent, professional, intelligent and empathetic. The only lawyer who genuinely work to help you rather than making money. He is a very experienced lawyer and he saved me so much money. He is so calm and kind towards his approach. He is the most genuine person I have come across.

I just came to London once to attend my hearing. My husband and his solicitors made it so complicated. My ex husband has to spend double the amount of legal fees than me. This is the difference between hiring a good experienced lawyer. Their fees might be expensive but good lawyer will make you save money at the end. Finally at the end I won the case and my husband has to pay all my legal fees without me travelling to the UK. I will always be eternally grateful to Henry Brookman and Brookman Solicitors. I am falling short of words to praise them.

I highly recommend their services. Keep up the good work.

Jen Ade 23/07/2020

I had an initial consultation and Henry was well prepared. He gave great advice and followed through quite quickly. He was very helpful.

Chris Mullins 15/07/2020

Henry and team were most professional, considerate and efficient when handling the financial proceedings owing to my overseas divorce. I recommend their services highly. International circumstance was at first to me most daunting and confusing, given each country had its' own unique approach. Thankfully Henry was knowledgeable of the law on either side of the seas and able therefore to provide best guidance and reasoning to me which enabled favourable settlement!

Wim Jansen 24/06/2020

I contacted Brookman to ask for information regarding the validity of an international divorce court ruling. They were very quick in providing me with the right information. When I had another question a few months later around children matters I phoned them again and after taking some background information and contact details they booked me in for a free telephone consultation with 1 of their partners Talitha Brookman. She spent half an hour of her time explaining to me what I could expect and provided legal advice. All was free of charge. I would not hesitate to contact them again should any matter become more formal and have to go through court. The service has been quick, professional and very friendly.