The family home is owned by my husband’s company - will the Court still order that it should be sold?

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Your family home may have been purchased by or transferred to a company, of which your spouse or civil partner is a director, a shareholder or both. You may be aware of this or it may have happened without your knowledge.

Property

Who owns your family home can be of crucial significance when you divorce and the court looks at Financial Orders.

What is a Financial Order?


If during divorce, nullity, judicial separation or the breakdown of a civil partnership you cannot come to an agreement about who gets what you can apply to the court for a Financial Order. You can also apply where you have reached an agreement to ask that the court approves the financial settlement and makes Orders reflecting the agreement reached. This process is separate to divorce, and you may have to attend a number of court hearings.

When considering a Financial Order, the court has the power to order you or your spouse, or civil partner, to pay a lump sum or regular maintenance payments to the other. They can also order either of you to share your pension.

In regards to property, if one of you owns the property you can be ordered to sell or transfer this to the other spouse. If you own property jointly, then this may have to be sold or transferred to one of you only. This is done using a Property Adjustment Order.

However, the court can only make these Orders in regards to property that you own outright or have an interest in.

What happens when the family home is owned by a company?


Recently, the Supreme Court has been asked to look into this issue in a case involving a successful oil trader whose company owned several properties including the family home.

His wife argued that as the companies were controlled by the husband, they should be ordered to transfer the properties to her in part settlement of her financial case. The first Order was made in favour of the wife.

However, the companies appealed this decision. The Court of Appeal said the court did not have the jurisdiction to make Orders against the companies. Their reasoning was that although the husband controlled the companies, it was the companies and not him who owned the properties.

The wife then took her case to the Supreme Court, where she argued that property controlled by the husband should be taken as property which he was entitled to. This property could therefore be the subject of a Property Adjustment Order.

The Supreme Court held that the court cannot pierce the "corporate veil", and the company was a separate legal entity to the husband. One of the Judges said that it was unlikely that a wife would ever be able to obtain a Property Adjustment Order piercing the corporate veil against a husband's company, however much he abused the company's resources and treated it as his personal piggy bank.

However, on the particular facts, the wife in this case was successful because the Supreme Court found that the properties were held by the companies 'on trust' for the husband. Therefore, although the companies were the legal owner of the property, these were held for the true owner, which was the husband.

Also, as the husband had not complied with various Court Orders for disclosure, the Supreme Court inferred he must have been covering up evidence that would otherwise have emerged and the companies did own the properties on trust for him.

Seeking legal advice


What happens when the family home is owned by a company is a complex area of the law. It is vital the parties involved receive expert legal advice as a solicitor can help explain the process to you and what you will need to do. They can help you to come to an agreement about financial issues and your options in regards to property.


To find out how we could help you please make a no-obligation enquiry or call freephone: 0808 129 3320.




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