The law, as we all know, imposes a set of rules to determine financial settlements on divorce. Whilst these rules will not necessarily result in an entirely predictable settlement, the general principles that they follow will of course have a broad bearing upon the outcome.
But not all couples will want such an outcome, should their marriage break down.
Those couples may therefore enter into an agreement, setting out how they want their finances to be dealt with should they divorce.
Such agreements are most commonly entered into before the marriage, and are therefore known as ‘prenuptial’, or ‘pre-marital’, agreements.
But what is a postnuptial agreement? It is also possible to enter into an agreement after the marriage has taken place – a ‘postnuptial’, or ‘post-marital’, agreement.
There is really very little difference in the process of obtaining prenuptial and postnuptial agreements.
In both cases the parties will have to first make full disclosure of their means, so that each party knows where they stand, and is able to make an informed decision as to the fairness of any agreement.
Both parties should also take expert legal advice before signing the agreement, or at least be given the opportunity to seek such advice.
And the agreement should really be drawn up by expert family lawyers, to ensure that it properly reflects the terms agreed between the parties, and is likely to be upheld by the court (more on which in a moment).
The only real difference in the process between obtaining prenuptial and postnuptial agreements is that in the case of the former there should be a period between the signing of the agreement and the marriage, say 28 days, to ensure that there is no suggestion that either party was under any compulsion to sign the agreement.
Obviously, a postnuptial agreement is of little value if the court will not uphold it should a divorce take place. Advice should therefore always be taken as to whether the courts are likely to uphold the agreement.
In England and Wales prenuptial and postnuptial agreements are treated in essentially the same way by the courts. What follows, therefore, applies equally to both types of agreement.
Unlike in many other countries such agreements are not automatically binding here. In fact, until relatively recently the courts here could ignore them entirely.
That all changed in 2010, when the Supreme Court held that the court should give effect to a nuptial agreement that is freely entered into by each party with a full appreciation of its implications, unless in the circumstances prevailing it would not be fair to hold the parties to their agreement.
The effect of this ruling is that, whilst the court still retains the power to order a completely different settlement, in most cases it is likely to uphold the agreement.
That still leaves one question: what if one party no longer wishes to be bound by the agreement? Can a postnuptial agreement be voided?
The answer to this really depends upon whether the agreement was fair in the first place, and whether it remains fair in the present circumstances which may, of course, be quite different from the circumstances prevailing when the agreement was entered into.
It is not entirely unusual that when the divorce takes place one party wants the agreement upheld and the other party does not.
In such a case the court will have to decide whether the agreement should be upheld.
To do this it will look at the circumstances surrounding the signing of the agreement looking, for example, at whether one party pressured the other to sign the agreement, in which case the court will obviously not uphold the agreement.
It will also look at the present circumstances, to see whether there has been some significant change, such as to make the agreement no longer fair. For example, the couple may since have had children, and that may have rendered the agreement unfair because one party gave up their career to look after the children, and is therefore considerably worse off financially than they were when they signed the agreement.
For further information regarding Postnuptial Agreements, see the Postnuptial Agreements page.
Ian Walker Family Law & Mediation Solicitors are award-winning family solicitors, recognised as one of the leading family law firms in the South West of England with services covering family law & mediation, divorce law, child-law and arbitration.
Please contact us if you require any further information.
It is obviously common that a divorce settlement will involve the transfer of the former matrimonial home from one party to the other.
And if there is a mortgage on the property the party transferring their share (the ‘transferor’) will want to be released from it, as remaining a party to the mortgage could obviously affect their ability to raise another mortgage, and could also affect their credit rating if the party to whom the property is to be transferred (the ‘transferee’) fails to keep up with mortgage repayments.
But what if the transferee can’t clear the mortgage?
The answer then is for the transferor to be released from mortgage.
The problem is that the court can’t order their release – this is a matter for the bank or building society who hold the mortgage (the ‘mortgagee’). Accordingly, the best that can be done is for the transferee to give an undertaking, or promise, to the court to try to obtain the transferor’s release from the mortgagee, within a reasonable time.
But sometimes that is not possible, because the mortgagee does not agree to the release. Where does that leave the transferee? Can they get compensation?
The answer was provided by a recent case in the Family Court at Yeovil.
The facts of the case were fairly straightforward, and typical of many similar family court cases.
The wife applied to the court for a financial remedies order. The only significant asset was the former matrimonial home in which the wife lived with the two school-aged children of the family. The property had an outstanding mortgage of £90,000 and an equity of a little over £37,000.
An order was made on 11th March 2019, providing for the property to be transferred to the wife, on her undertaking to use her best endeavours to procure the release of the husband from the mortgage on or before 1st April 2019, and to indemnify him in respect of any liability arising under it.
The property was duly transferred to the wife, but she was not able to obtain the husband’s release from the mortgage.
In September 2021 the husband applied to the court for a sale of the property, claiming that the wife had failed to use her best endeavours to obtain his release from the mortgage. He also sought an order that the wife pay him £80,000 to compensate him for not being able to take out a mortgage on another property, and for having to pay larger sums by way of interest on loans as a result of the poor credit rating that he had incurred as a result of the wife’s alleged failure to keep up with mortgage repayments (which the wife denied).
In the event in January this year the wife finally succeeded in re-mortgaging the property and obtaining the husband’s release from the mortgage. She therefore applied to have the husband’s application struck out.
The husband agreed that there should no longer be a sale of the property, but continued with his claim for compensation.
The judge found the husband’s compensation claim to be misguided.
The indemnity contained in the wife’s undertaking was only in respect of any liability under the mortgage, nothing else.
If the husband had suffered any loss then his remedy was to apply for an order for the sale of the property, which he did. The fact that the wife had obtained his release from the mortgage before it was heard made the application superfluous.
The court had no power to award compensation, and the husband’s application was therefore struck out.
The husband had argued that the court should have obtained a mortgage capacity report in relation to the wife, before making the order. Such a report would have given an indication of what level of mortgage the wife was likely to obtain. The judge did not accept this argument, but it does give an indication of what could be done to prevent such a situation as occurred in this case from happening.
Ian Walker Family Law & Mediation Solicitors are award-winning family solicitors and are recognised as one of the leading family law firms in the South West of England with services covering family law & mediation, divorce, child law, and arbitration. For expert advice, please contact the team.
