On divorce, most people also settle their financial affairs. This will include whether the house is sold, how any other assets are divided and who will take on responsibility for any joint debts. Ongoing payment of a mortgage is a common issue which we will look at in more detail.
When financial matters are settled on divorce that should really be the end of it. It’s not ideal to have to revisit your financial affairs years after your divorce. That’s why most separating couples take legal advice and incorporate any agreement they have reached in to a court order. It provides some certainty for the future for all involved.
A common question is what happens with an existing mortgage? It may be agreed that one party remains in the property, say because there are young children, but it may not be possible for them to take on the mortgage in their sole name.
A court does not have the power to transfer a mortgage to another person. The way that the courts and lawyers deal with this is that the payer (usually the one remaining in the property) will give a promise to the court that they will pay the mortgage. They will also promise that the other party will not have to take on any responsibility for any liability that may arise in connection with the mortgage. This promise is called an undertaking. It is given in the preamble of the order.
An undertaking is a solemn promise made to the court and if this promise is broken it is a contempt of court, the punishment for which can be imprisonment.
If you’re the other party (the one not living in the property) you still remain on the mortgage but you have a promise from the other person that they will be responsible for the mortgage.
What happens if the payer fails to pay? The mortgage company see your name on the mortgage and will chase you for payment, so what can you do?
You can take action through the courts. Although it is not part of the court order itself, an undertaking is enforceable and action can be taken for the payment of money if you find yourself in this situation.
We would never recommend going straight to court and there are other things to consider first, such as talking to the other party, or attending mediation if this is part of some wider issues that need to be resolved. However, if you find yourself in this situation, you should take legal advice so that action can be taken.
Equally, if you’re supposed to be paying the mortgage and cannot do so, you can also take action and take advice about whether the agreement or order can be amended before you find yourself subject to proceedings for failing to pay.
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