There is a lot of speculation in the media at present about the impact that lockdown is having on our economy. The full impact of this is not yet known. For those divorcing, the potential impact on the housing market is particularly difficult, given that the main asset owned by most couples is their house. While some couples agree that selling the house is their best option, many agree that one can buy the other’s interest in the property. However, if they cannot be confident about the property’s value, how can they agree how much needs to be paid?
If we do have a recession, it is likely that house prices will go down. The value of commercial properties, which are assets that can also be dealt with in divorce, are also likely to be impacted negatively. However, this does not mean that all land and properties will automatically reduce in value during a recession. During the last recession, which started in 2008, agricultural land not only held its value but increased in value. It is always worth getting specialist valuation advice when valuing assets for divorce purposes.
If you have not agreed a financial settlement yet, you may want to wait and see what happens to the economy and therefore the value of your and your spouse’s assets, before agreeing a financial settlement, given that it is a decision that will have a significant impact on your life.
But what happens if you have already agreed a financial settlement? If the agreement has not yet been made a court order, you can still step away from the agreement and take time to obtain up to date specialist valuation advice on the value of your property and other assets.
However, if your financial agreement has already been made into a court order, you cannot ask the court to set aside this agreement just because the values of the assets have changed and the agreement is now unfair. During the last recession, in 2009, the Court of Appeal was asked to do this in the case of Myerson v Myerson, where Mr Myerson’s shareholding in his company reduced from £15 million at the time that the financial order was made in February 2008, to less than £1.4 million by the end of that year due to the global recession, and the Court of Appeal refused.
There are a small number of cases where you can set aside a financial order where a significant mistake has been made or where there has been material non-disclosure by one of the couple. There is an even smaller number of cases where a financial order can be set aside on the grounds that something unforeseen and unforeseeable has occurred after the order was made, which fundamentally undermines it. There are very strict criteria that you have to satisfy to do this successfully. There are no reported cases yet as to whether Covid-19 satisfies these criteria. However, given the approach of the Court of Appeal in Myerson it does not seem likely that it will do.
What can be varied, after a financial order has been made, are maintenance payments, for both former spouses and children, and school fees orders. If after your financial order has been made your income reduces significantly, which is reported to be happening to many people at present, the court can vary these payments downwards to reflect the change in your income.
If you are affected by any of the issues outlined above, please get in touch today. We're here to help.