How to value property in a divorce
The best London divorce solicitors will tell you that if you are separating from a husband or wife, the first step in reaching a financial settlement is to find out what the assets are. The second step is to make sure that the assets are correctly valued. If assets are not accurately valued then the financial settlement can result in unfairness to either the husband or wife.
The only time that a husband or wife may say that valuations are unnecessary is if there is an agreement to sell the family home and any shares or other investments, in which case the assets are worth what they sell for.
However, the top London divorce solicitors often find that when a couple separate they do not know if they want to sell the family home or to sell a share portfolio or second holiday home. Often it is not until a husband and wife know what a property is worth that a husband and wife can decide if they want to sell up or try to keep the family home or second holiday home as part of their financial settlement.
How can OTS Solicitors help?
If you need legal advice on a financial settlement or financial court proceedings then OTS Solicitors divorce and family finance team can help you.
For a confidential discussion on how OTS Solicitors can help you in negotiating a financial settlement or by providing representation in court proceedings please call us on 0203 959 9123
Many separating married couples try to rely on estate agent appraisals to value the family home, often getting two or three estate agent’s views and then agreeing to average the figure to reach an agreed property valuation figure.
The top London divorce solicitors say that relying on an estate agent’s appraisal to value property, rather than obtain a formal valuation by a surveyor, can be a bad idea. In some property markets, a property may be unlikely to reach the estate agent appraisal valuation, either because the agent’s recommended price is an ambitious marketing rather than a realistic sale price or because property is going to sealed bids because of low property stock.
Court proceedings and valuing property
If a husband or wife start financial court proceedings, there will be a series of court hearings after financial disclosure has taken place.
At the first court hearing (the first directions appointment hearing) a judge will ask if property valuations are required. If a husband and wife agree on the value of a property, their agreement on the value can be recorded on the face of the court order to avoid a later dispute on what they agree the property is worth.
If a couple cannot agree on a property value, a court can order a formal valuation of a property by a surveyor who is normally a member of the Royal Institute of Chartered Surveyors.
Court proceedings and single joint expert property reports
Top London divorce solicitors advise that normally a family judge will say that one surveyor, jointly instructed by the husband and wife, should undertake a valuation of property for use in financial court proceedings.
The advantage of using one expert is that the husband, wife, and court do not then get conflicting opinions on a property value by different surveyors and costs do not escalate by the costs of surveys and experts being required to attend court hearings to justify their varying valuations.
The best London divorce solicitors find that spouses can be sceptical about jointly instructing a single joint expert in court proceedings to value property but a single joint expert is:
Independent of both husband and wife and should not of had prior dealings with either party or the property ; and
Not influenced by whether the property is owned jointly or in the sole name of a husband or wife or jointly with a third party. All the single joint expert is focussed on is the value of the property and not ownership; and
Instructed by the solicitors for the husband and wife who will agree on the identity of the surveyor and agree on the joint letter of instruction to the single joint expert and the remit of the report. If the solicitors cannot reach agreement on the identity of the expert or instructions then the court can be asked to decide; and
Under professional and court rules on reporting duties to ensure that the report is independent and impartial.
What property should be valued in financial court proceedings?
It is often assumed that only the family home needs to be valued by a single joint expert surveyor. That is not necessarily the case. Consideration also has to be given to valuing:
Any second home or holiday home ; and
Buy to let property portfolio; and
Any property owned by a family company that is relevant to the financial court proceedings. That is because if the property is included in the company accounts the company cannot be accurately valued unless there is an up to date valuation of the property ; and
Any property held within a pension fund, such as a SIPP or family company pension scheme. That is because the value of the pension fund cannot be accurately determined without an up to date pension property valuation.
Tax and property in financial court proceedings
The best London divorce solicitors recommend that expert advice is taken on the tax implications of the sale or transfer of property made pursuant to a financial agreement between a husband and wife or made by a judge in a financial court order.
Top London divorce solicitors say that when negotiating a financial settlement or when a judge makes a financial court order it is vital that the court and parties look at the net value of the property after any capital gains tax liability has been factored in on the sale or disposal.
The best London divorce solicitors recommend that if you own property or have a property claim and need to reach a financial settlement that you take expert advice on your financial settlement options.