Mesher Orders and Martin Orders: What You Need To Know
March 13, 2009 158 comments
Wives and mothers usually wish to remain in the marital home – but it isn’t always a good idea to postpone a sale.
A Mesher order is a court order that postpones the sale of the marital home and gives a chargeback to a husband exercisable on the occurrence of specified events. It originated in an eponymous case in 1980, when the Court of Appeal permitted the wife to remain in the marital home with one child until the child was 17 or further order of the court.
When there are no children, the court can still make a similar order for one party to remain in the marital home and thus postpone the sale. This is known as a Martin order, after an eponymous case in 1978, when the Court of Appeal held that the wife could remain living in the property for the rest of her life. The court postponed the husband’s interest from being realised until then, having found that the husband had no immediate need of a capital sum, and the wife would have had insufficient equity to re-house herself had the marital home been sold.
These types of orders were common in the 1980s and 1990s, when there was a need to keep less wealthy mothers and children in their homes, because there would have been insufficient capital to re-house them. They fell out of fashion because they were fraught with difficulties. These difficulties surfaced when the time periods expired and the houses came to be sold.
Typically, the children had reached their majority by this point. When the mother had to sell the home, she discovered that despite inflation, there was still insufficient equity in her share to enable her to buy another property. The Mesher order had been a temporary alleviation of the problem – but nothing more. In fact, in many cases the woman was left worse off, because her reduced amount of time left in the workplace meant that she was unable to raise a mortgage.
I do of course understand that many wives and mothers wish to remain in the marital home. All sorts of arguments – some practical, some child-related and some plainly emotional -are advanced and it is hard not to be sympathetic. However, a lawyer must always think about the client’s overall best interests not only in the short term. That is what we are paid for.
Last week, the BBC reported that a woman who had taken her much litigated divorce settlement to the Court of Appeal had finally settled out of court with her former husband. According to the Daily Telegraph, “Mrs Bokor-Ingram, 38, had applied to vary the terms of her settlement because her 40-year-old ex-husband allegedly failed to tell her he was negotiating a better-paid job when they split.” Mrs Bokor-Ingram argued that had she known the truth, she would never have agreed to the “Mesher” arrangement that the couple had made in relation to their former marital home. The BBC reported that under the terms of the out-of-court settlement, the ownership of the house will now be transferred to her in full.
I think that Mrs Bokor-Ingram has been fortunate, in that the allegations about non-disclosure enabled her to renegotiate her settlement. A Mesher order is one that I would advise a client to avoid if possible. Such a proposal is commonly made during negotiations by the spouse who continues to pay maintenance.
If the other spouse has hopes for an amicable settlement and wishes to remain in the marital home, a Mesher order can appear to be an attractive option. Unfortunately, it can result in far more long-term problems than it solves in the short-term and – and agreeing to one of these orders can lead to a good deal of regret.
If you are faced with this dilemma, consider the following options:
1. Should you negotiate instead for all the equity in the home, so that you can re-house your household immediately?
2. Should you hold out for a transfer of property order, which would you the entire equity in the house?
Only as a last resort would I advise a charge back – and only then if the wife is acutely aware of the long-term impact of such an order. How will she manage when the charge is redeemed?
But there is also a warning to husbands who might be thinking that this is a good way of ensuring a long term windfall:-A further sting in the tail of a Mesher or Martin order is that the husband may have to pay capital gains tax when he finally receives his payout. This applies if he has purchased a principal residence elsewhere, unless the actual amount to be paid to him from the marital home is specified in the order. However, few husbands will agree to an inflation-hit – and therefore diminishing – figure over a long period of time. It would render their “investment” practically worthless.
Image credit: SundarEswaran Padmanabhan.