A Property Adjustment Order is a legally binding court document which sets out how marital property, such as the family home and financial assets, should be redistributed (i.e. transferred or settled) after divorce to ensure a fair division of assets based on the needs of divorcing parties. A court may need to issue a Property Adjustment Order if ex-spouses cannot agree on the distribution of their marital assets between themselves. There are several different types of Property Adjustment Order, including a Settlement of Property Order and a Transfer of Property Order (see below). You can apply for a Property Adjustment Order during or after divorce proceedings.
A Property Adjustment Order is a type of financial order which typically applies to the family home and can dictate whether:
- A joint or sole-owned property should be sold, and when it should be sold
- A joint or sole owner property should be transferred into the ownership of one individual
- The family home should be retained for the benefit of a child (this is referred to as a Settlement of Property Order).
Types of property adjustment order
There are several different types of Property Adjustment Order catering for both the transfer and settlement of marital property following divorce, including a Transfer of Property Order, Settlement of Property Order, Mesher Order, and Martin Order.
Transfer of Property Order
A Transfer of Property Order may be issued by the Court in order to transfer the ownership of marital property to one party following divorce or dissolution. Transfer of Property Orders represent the most common type of Property Adjustment Order in the UK. With a Transfer of Property Order, the other party may receive some form of compensation in lieu of their share of the property, such as another marital asset or a lump sum payment. Property that can be transferred can include real estate, shares, life insurance policies, an interest in a dissolved partnership, or an interest in the will of a living person.
Settlement of Property Order
A Settlement of Property Order creates a trust over the property for the benefit of one or both parties or for the benefit of a child of the family. With this type of arrangement, the beneficial interests in the property change as soon as the order becomes effective. The two most common types of Settlement of Property Order include the Mesher Order and the Martin Order.
A Mesher Order is a type of Property Adjustment Order that is issued by the courts following divorce. With this type of order, the marital property is not sold immediately. Instead, one of the divorcing parties remains in the property for a certain amount of time. This may be, for example, until the youngest child living in the property reaches the age of 18, at which point it can be sold and the proceeds split. Because both parties maintain an interest in the property, a trust arrangement is put in place, which sets out how the mortgage (if there is one) will be covered.
A Martin Order is another type of Property Adjustment Order that allows one of the divorcing parties to stay in the marital property either for the remainder of their life or until they enter a new partnership or get married. When this happens, as with a Mesher Order, the property will be sold, and the proceeds split. Martin Orders tend to be used instead of Mesher Orders where there are no children from the marriage and the person leaving the home has no immediate financial need (i.e. to buy another home). In addition, a Martin Order may be a better option if transferring the whole of the marital home to one party would lead to an unfair division of assets.
Please speak to our family law solicitors to understand whether a property adjustment order would be beneficial in your situation.
How to get a property adjustment order
You will need to start the process of applying for a Property Adjustment Order after you have submitted your divorce or dissolution petition, typically after the Conditional Order has been granted. Remember, under the no-fault divorce process, you must wait at least 20 weeks from when your divorce petition has been issued by the courts before you can apply for a Conditional Order.
During the divorce process, you and your ex-spouse will need to provide full financial disclosure assets by completing form E. Before applying for a Property Adjustment Order, you will need to try to reach an amicable agreement on the settlement or transfer of your property between yourselves. This can be done by discussing the matter between yourselves or with the help of a trained negotiator or mediator. The process of mediation starts with a Mediation Information & Assessment Meeting (MIAM). If mediation is not suitable or effective, your family law solicitor can then apply to the court for a Property Adjustment Order.
Getting a Property Adjustment Order involves making an application to the court for the required type of order – i.e. a Consent Order or a Financial Order. A family law solicitor can advise you on which order to apply for and handle this process on your behalf, including gathering the documents required to support your case.
Once the Property Adjustment Order application has been submitted, the court will arrange a hearing where they will review the evidence presented. Depending on your circumstances, the court may agree that the marital property should be transferred outright, or there may be a need for a lump sum order to the ex-spouse releasing their property rights. They may also issue a clean break order to prevent future claims for financial provisions.
When considering whether to issue a Property Adjustment Order, the courts will take into account a range of factors, including the length of the marriage, whether there are children from the marriage and their ages, the income and financial status of both parties and the other marital assets available.
