Real Estate Alliance Agent Eoin Dillon reports on the separation process and advises on the dissolution of property assets when the union fails.
The demographics of homeownership are changing rapidly in our quickly changing society and the way we purchase our homes is also changing. However, the thought process behind the decision to purchase and particularly the get out clause is lagging behind. Traditionally, a young couple got married and bought their first home in their early twenties before starting a family, had 3-6 children and may have moved home once more in their life. Today young couples eventually get tired of renting accommodation and if at all possible decide to put their first step on that property ladder. Many will have help from their parents etc and others will purchase with a friend, family member or partner. Unfortunately, for many they simply rush into the purchasing without thinking of the consequences of what might happen if their relationship fails.
Purchasing with a family member is probably the most simple, blood is thicker than water and usually the relationship is strong enough to withstand any challenges ahead. Purchasing with a plutonic friend can also work out well provided that both parties agree before hand as to how they are going to deal with the situation should one party want to get out of the property or buy the other party out. Purchasing with a partner is obviously the most difficult and needs the most thought.
For convenience I will deal mainly with the marriage situation but the fundamentals are the same no matter how the union is formed. Marriage may be on the decline but separation and divorce certainly are not and unfortunately it is an increasing part of an Estate Agents business. Obviously we need to look at the rights of cohabiting couples, same sex unions, plutonic friends and siblings who have decided to purchase together and personally I believe that the law will have to recognise and treat all unions equally irrespective of how or when they were formed.
Like any partnership we all know that people and circumstances change and often what seemed to be and ideal situation can lead to difficulty and stress at a later stage.
Many people believe the divorce legislation provides that the financially dependent party is only entitled to have their reasonable needs catered for “maintenance”. Without getting into specific case law the courts view is changing quickly and there have been many high profile court cases particularly in the UK over the past few years which would indicate that the Court’s are now more inclined to provide that in addition to having their reasonable needs catered for that the parties are having their assets divided on a much more equally proportioned basis. This seems to be perfectly fair given that one party may have sacrificed their own personal career to support their partner in his or her career or the accumulation of the assets. Basically, the Courts are more inclined to split 50:50 whatever assets have been accumulated by the couple during the course of the union.
It’s dreadfully un-romantic but my advice to anyone entering to “long term” relationship, is that when they decide that the relationship is at the long term commitment stage that they should have their assets valued and have mutually agreed the value of same. This then at least sets the benchmark as it can be very difficult to value an asset several years after the valuation date and it would appear from the Courts that separating couples will be increasingly asked to provide two different valuations of the assets, one being the value of their assets on the date of the formulation of the union and the other being on the date of dissolution of the union. We know that there is a lot of talk about prenuptial agreements etc and different legal advisors will differ as to the effectiveness of same. My own non legal belief is that the law provides that you cannot contract out of your legal rights and accordingly the enforceability of a prenuptial agreement could be difficult particularly in this jurisdiction. They do however have the advantage of setting out clearly how the couple intend to deal with their assets should the union end and consequently the Courts are inclined to look at them but need not necessarily rely on them.
Apart from having agreed how to deal with the property assets and the dissolution of the partnership my main advice would be to take your time. How many times have we seen couples that have a row, split up and then get back together again and some times do it all over again. Parting couples should look at one partner paying rent to the other for say a year or at least until they are certain that the union is completely over before taking any drastic steps such as selling the property. Friends or siblings should look to sell their share to the other or if this is not possible to someone else to whom both parties can agree as being suitable before actually selling the asset and splitting the proceeds. Friends and siblings should look at having a joint account (business account) where all property related bills, repairs and maintenance etc are paid from and should keep a receipt of all such expenditure. Normally, when one friend or sibling are buying the other out of the property they will agree to either appoint a valuer jointly to assess the value of the property or two individual valuers with the average nett value being used.
When couples are separating, the valuers are usually contacted by one of the solicitors and asked if they can prepare a valuation for Mr. or Ms. X. Valuation work for divorce /separation work remains a niche practice with many firms of valuers actively avoiding such work due to the time and emotional consuming nature of the work. Normally if appointed, we will go and inspect the property. I find that it is best to inspect it on my own without meeting either of the parties. Our job as valuer is to value the property and to estimate what price we would achieve for the property were we to put it up for sale on the valuation date. I would then prepare my report and valuation and send it to the Solicitor who will normally then exchange a copy of it with the other side. Hopefully, the two valuations will be close enough together for the parties to agree same and that the value of the properties sorted and out of the equation. Some couples will simply agree to use only one valuer to value the property but this would not be the norm. You can expect to pay your valuer €300-500 + VAT in respect of an average house. Obviously, where the property portfolio extends beyond a residence or one geographical location you may find that you may need to employ a different valuer for different properties or a valuer with specialist knowledge and skills in a particular sector.
Unfortunately, some cases turn messy and it is important to ask your valuer from the beginning as to whether or not they are prepared to go to Court and give evidence and if so how much they would be charging. Normally, the valuer will charge €100-150 + VAT per hour for preparation work, meetings with solicitors/barristers, travel time and attendance at the Courts. Parties to the Court proceedings need to be aware that whist they may have appointed the Valuer once the valuer is in Court they are an Expert Witness giving evidence under oath and their duty is to the Court and not their clients.
Increasingly, Accountants are becoming involved in some of the separation work that would normally have been handled by solicitors and particularly in relation to the distribution and financial declaration of assets, means, etc and from my experience they tend to be less adversarial by nature and consequently can be more inclined to help to bring about a more amicable solution. Perhaps in a few years we will see a whole new profession emerging with the skills of a Marriage Councillor, Divorce Attorney, Liquidator/receiver, PR Consultant, Mediator and United Nations Diplomat emerging specialising in the facilitation of the dissolutions of partnerships.
Eoin Dillon is a Chartered Valuation Surveyor and a fellow of the RICS and SCSI and runs Eoin Dillon Real Estate Alliance in Nenagh, Co. Tipperary. The above article is for general guidance only and parties are advised to seek their own legal and valuation advice.
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