Will the cladding crisis impact on my divorce?
Following the Grenfell tower disaster in 2017, many flat owners across the UK have been affected by the cladding crisis. With having to foot the bill for additional surveys, safety installations, insurance premiums, and remediation work, these individuals have come under severe financial strain, and in many cases are now trapped in their unsellable properties.
The risks of unexpected issues arising became clear with the recent judgement in the case S v T [2021]. This raised further questions as to how the cladding scandal may impact on financial settlements reached between divorcing couples.
We are a firm of specialist and experienced family lawyers who will able to guide and advise you through the divorce process, ensuring that you are able to meet your financial obligations as part of any settlement should you be impacted by the cladding crisis, or any other unexpected issues that crop up in your case. By using an experienced and specialist firm you are assured of being advised throughout your case of the implications of the decisions that need to be made.
S v T [2021]
In this case, the parties agreed a financial settlement in court in September 2019. The family home was a flat in East London, valued at £1,100,000 subject to a mortgage of £620,000. It was agreed the family home would be transferred to the wife in exchange for a lump sum payment to the husband of £300,000. The wife intended to borrow against the existing mortgage on the family home and was in discussions with the lender prior to the hearing about this possibility. This was not disclosed by the wife during the proceedings. As the divorce proceedings had not progressed to the appropriate stage required for a court order to be made, the arrangement was recorded in a binding agreement which would later be made into a court order.
After the hearing, the divorce matters were concluded, and the wife progressed her borrowing application with the mortgage company. The additional lending application was approved in principle, subject to a surveyor’s report. The building was inspected for the report, and the wife subsequently received a telephone call. She was informed there was no fire safety certificate in place, and that government guidance following the Grenfell tower disaster meant a substantive valuation could not be given until the certificate was available. The wife spoke to the freeholders and developers of the block of flats who advised that there were no Aluminum Composite Panels at the property, and that a rigorous process was undertaken to satisfy building controls and NHBC. The wife believed that this was a technical issue which could be resolved with appropriate paperwork as there was not a problem with the cladding itself. The wife had the opportunity to bring this issue to the attention of her husband and his lawyers, where she could have asked for this issue to be sorted before any court order was made, but instead she took a risk and continued with the court process.
The parties signed the court order in November 2019, which was approved by a judge. The terms of the order stated that the £300,000 lump sum was to be paid to the husband within 60 days of receipt of the officially sealed court order. The wife’s solicitor sent a letter to the husband the day after informing him that the mortgage surveyor’s report concluded the property had a value of £0, and that the wife was doing all that she could to rectify this and secure funding from the mortgage provider.
The sealed order was received from the court and the husband was due payment of the lump sum by the 21st February 2020. The wife tried everything she could to get the borrowing arranged and attempted to raise funds by other means. She paid the husband £50,000 towards the overall sum, which the husband accepted. Following the 21st February 2020, the wife attempted to find alternate lenders, but they would not assist until the cladding issue was sorted.
In June 2020, the wife received the news from a chartered fire engineer that following an inspection of the building where it was concluded that the standard of safety was not adequate, and remedial and interim measures were required. It was estimated the works may cost around £40,000 for each flat.
The husband issued proceedings with the court to enforce payment of the remaining £250,000 he was owed under the financial settlement. The husband sought the immediate forced sale of the family home, and to be paid his lump sum plus interest. A month later, the wife also applied to the court to set aside the court order so that she could remain in the family home and renegotiate the level of lump sum to be paid to the husband.
The case reached a final hearing where the judge determined that while the wife could not have anticipated the extent of the cladding issues, she could have withdrawn her consent to the deal reached with her husband at court at any time before she signed the court order when the potential problems became apparent. The wife had taken a gamble which unfortunately led to the worst-case scenario for her, but it was still a gamble nonetheless. The judge therefore concluded that the court order should not be set aside.
In considering whether the property should be sold in satisfaction of the lump sum owed to the husband, the judge recognized that the unexpected cladding issues was not the fault of either party. The judge made an order for sale of the family home on the basis that this was delayed until the cladding problems could be sorted. This was to enable both parties the prospect of a reasonable financial future. The judged ordered for the wife to remain in the family home but meet all outgoings, including service charges and costs arising out of remedial works from the cladding issue, and for her to use her best efforts to buy out the husband’s interest. If the wife was not able to do this by the time the cladding issues were resolved, then the property would be sold.
For those interested in the legal details the full judgment is available on the British and Irish Legal Information Institute site here –
https://www.bailii.org/ew/cases/EWFC/OJ/2021/B11.html
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The ongoing issue with funding, liability, and timescales in respect of the cladding scandal still remain unclear, however if you are concerned of the possible impact this may have on your financial settlement,
contact us today for more information.
