Disposal of sole owned house in a marriage

Calahonda52

A and B are married and both own properties in their sole names

They live in a jointly owned house which is their PPR

A wants to sell his property and has been advised he needs B's consent under family law.

Is this correct?

Furze99

What's yours is mine and what's mine is yours.

Is that not the basic legal basis of finances and assets in Irish marriages?

country girl 55

Yes that is correct. The spouse will have to consent and sign paperwork in the solicitor’s office

Marcusm

https://www.boards.ie/discussion/comment/122051123#Comment_122051123

no it is not, you have been woefully misinformed.

Marcusm

I have been through this. In theory, the purchaser’s solicitor simply needs to establish that the relevant property has never been a “family home” as respect you and your spouses. In practice, however, they will rarely rely on due diligence and will insist that the non-owing spouse swears a family home protection act declaration that they do not object to the sale. In my case, I was selling to someone I had known for 30 years and could clearly establish that my spouse and I had not lived in the property (nor indeed in Ireland at the relevant times) and the solicitor was intransigent. This resulted in a visit to a Portuguese notary for a document which clearly they could not understand.

If your spouse is unwilling to provide this, I suspect you will find it difficult to sell. It does not in any way grant an interest in the property to your spouse.

Peregrinus

The rule is that you can't sell a property you own without your spouse's consent if it is a "family home". If you do sell a family home without your spouse's consent, the sale is invalid. This is a huge issue for the buyer, because he doesn't want to shell out hundreds of thousands of euros and then discover at some point in the future he has got nothing in return. And if there's a lender involved it's a huge risk for them too; they lend hundreds of thousands of euros and then discover that they've got no security.

This means that buyers and lenders need either (a) to be satisfied that there is no possibility that the property is a family home; or (b) to be given the spouse's written consent to the sale. Note that there's absolutely no reason for the buyer or the lender to accept any risk at all on this point; why would they? So the seller satisfies both the buyer and the lender in one or other of these ways, or the sale is off.

In some circumstances it's relatively easy to satisfy people that the property being sold is not a family home — e.g. if it's a factory or a boatshed or farmland with no buildings on it. Or, if the seller is unmarried or widowed. But if it's a married seller offering a residential property, it's not so straightforward.

It will not be a family home if the seller and the spouse, or the seller's spouse on her own, never ordinarily resided in it. But, to be satisfied about that, the buyer and the lender will usually want a statutory declaration from the spouse saying "I never lived there". They could choose to accept a declaration from the seller saying "my spouse never lived there", but why would they? The seller could be lying; why would they run even the tiniest risk of that? So the market practice is to offer a declaration from the spouse, and both buyer and lender will be extremely leery if that's not offered.

Alternatively, people will be satisfied with a statutory declaration from the spouse saying "I consent to the sale of this property". In many ways, this is simpler and neater; if the spouse consents, it doesn't matter whether it's a family home or not.

Either way, you're going to need a statutory declaration from the seller's spouse. And, since the second kind of declaration ("I consent to the sale") is simpler, and is sufficient in all circumstances, that's usually what's offered.

Calahonda52

Thank you both M & P for this.

So in essence, its a CMA job by all concerned, not withstanding the "lighter touch possibility" elucidated by P at the end of the post.

Peregrinus

It's risk avoidance job. There's no reason why the buyer or the lender would run the risk that the sale/mortgage of the property to them would be null and void. So they don't run that risk. They avoid the risk by getting the statutory declaration.

To put it another way, it makes more sense for the seller to provide the declaration than for the buyer or lender to run the risk of not having it. So the sensible thing happens.

Calahonda52

https://www.boards.ie/discussion/comment/122052126#Comment_122052126

https://www.boards.ie/discussion/comment/122052126#Comment_122052126

Agree 100%, as you say why take the risk!

Thanks and keep well

Furze99

https://www.boards.ie/discussion/comment/122051649#Comment_122051649

Maybe helpful if you explain your point further? In relation to Irish property only for simplicity.

If my wife and I live in a family home and I also have another property in my sole name. Both assets surely belong to both of us. If I were to die tomorrow, both property assets would transfer to her. If I sell the second property, we both have a financial interest in the sale as the proceeds will be ours jointly. What's mine is hers. So since she has a financial interest in the second property, is it not logical that she would give approval to the sale.

Peregrinus

https://www.boards.ie/discussion/comment/122052381#Comment_122052381

No. The second property that is in your sole name does not belong to both of you; it belongs to just you. If you die, it will not transfer to her unless your will so provides, or she takes it as part of her legal entitlement to a share in your estate (and, unless it is the family home, she cannot insist on taking it). If you sell the second property, the proceeds do not belong to the two of you jointly; they belong to her you alone.

There is no rule in Ireland that the assets of each member of a married couple belong to both spouses jointly. Some countries have such a rule, or a version of such a rule, but Ireland does not.

If you separate or divorce, at that point a court may make orders transferring your property, or some of it, or a share in some of it, to your spouse (and it can make similar orders in relation to her property). But that's "may", not "must". And if the court does order the transfer of a share, it need not be a 50% share. And until those orders are made, you own your property and she owns hers.

Marcusm

https://www.boards.ie/discussion/comment/122052381#Comment_122052381

no; what’s yours is yours and what’s hers is hers. In a divorce or separation, orders may be made for separation of assets or pension adjustment orders etc but the owner of an asset is the owner of an asset. For example, say you and your wife jointly own the family home and it is subject to a mortgage. Perhaps you receive a bequest of €1m on the death of a parent and have c€780k after payment of capital acquisitions tax. You are perfectly free to immediately cash the cheque and put it on the 3:45 at Fairyhouse if you fancy it; it belongs to you.

Furze99

https://www.boards.ie/discussion/comment/122078688#Comment_122078688

Hmm… well I think we'll just stick to the very sensible principle of 'what is mine is hers' and 'what is hers is mine'. That is the general basis of marriage and why people throw their lot in with each other. It's particularly important in families where there is one primary income earner.

Peregrinus

https://www.boards.ie/discussion/comment/122080386#Comment_122080386

It's a sound principle, if you and your spouse are both agreed on it. But it's important to understand that it's not the legal position. So if you and your spouse ever cease to agree on it — and that kind of them can happen when unhappy differences arise in a marriage — then the actual legal position becomes paramount.

(In other words, if you and your spouse think that all your assets are/should be shared property, it's a good idea to bring the legal situation into line with your expectations. Make sure all your bank are joint accounts, not separate accounts. Make sure the house, and any other property you may own, is registered in joint names. Etc, etc. )

Calahonda52

Thanks for the insights and constructive debate thus far.

What would be the case if one of the sole owned properties was held in a close company:

eg transfer house into Myco where A is the sole director/shareholder and reflect the liability as amt owed to Director

So Total asset 251[ Bank 1, house 250] OSC 1 ,due to director 250]

nompere

That's a great way of either creating a CGT liability where one doesn't otherwise exist (if the property is a PPR) or increasing the liability in other circumstances.

Calahonda52

https://www.boards.ie/discussion/comment/122099800#Comment_122099800

would you like to expand, especially if there is a crash

Gael23

The spouse just needs to sign a declaration that they consent to the sale

My grandparents went through this, back in the 1960s when they bought the house only the husband signed the documents, that was just the way at the time so she just had to sign a document consenting to the sale

Peregrinus

https://www.boards.ie/discussion/comment/122099368#Comment_122099368

Well, A will need the consent of the other spouse to transfer the family home to Myco to begin with. So all you're really doing is bringing forward the need to obtain the spouse;s consent to to the transfer of the property.

If the spouse does consent and the home is transferred to Myco then, as nompere points out, it cease to be a principal private residence for capital gainst tax purpose, so if there is any gain on a later sale that will be chargeable to capital gains tax.

Plus, I'm not convinced that doing this will actually avoid the need to get spouses consent when Myco later sells the house. What the Family Home Protection Act says is that "where a spouse, without the prior consent in writing of the other spouse, purports to convey any interest in the family home to any person except the other spouse, then . . . the purported conveyance shall be void". If Myco is wholly controlled by A, so that A acts for or on behalf of myco in selling the house, could the spouse argue that, although the interest being disposes of does not belong to A, A is nevertheless instrumental in conveying it to the purchaser, so the spouse's consent is required.

The limiting factor here is not what the law requires; it's what a purchaser will accept. Purchasers will expect the spouse's consent, or a completely satisfactory and uncontroversial demonstration that no consent is required. If the house has been transferred into a holding company with the apparent purpose of evading the protections afforded by the Family Home Protection Act, no purchaser is going to accept the risk of the efficacy of that device being challenged. You'll be told in no uncertain terms that you can produce the spouse's consent, or you can put the house back on the market and find yourself a different purchaser — if you can.

Calahonda52

Thanks for all this.

I may have misled you

What would be the case if one of the sole owned properties was held in a close company:

is not the family home

first post

A and B are married and both own properties in their sole names

They live in a jointly owned house which is their PPR

Peregrinus

So we've got . . .

(a) a residential property

. . . which is currently owned by . . .

(b) a limited company, Myco.

Myco is wholly owned and controlled by A, who is married to B. B has no stake in or involvement with Myco.

The house is offered for sale. The seller is, obviously, Myco. A is the director who acts on behalf of Myco in relation to the proposed sale.

As purchaser, if the consent of B is not being offered, I think what I'd want is unimpeachable assurance that there is no possible argument that the house might be B's family home. A statutory declaration by A that B has never lived in the house, either alone or together with A, but I'd be more satisfied if the statutory declaration came from B.

That might not be possible. A and B might be estranged, for instance, or B might be suffering from dementia. A purchaser's attitude to being offered a declaration by A would be affected by knowledge of circumstances like that.

Also relevant would be considerations like: why is a residential property held in a close company in the first place? That's not a common arrangement. If the purchaser suspected that it might be part of an attempt to evade the protection of the FHPA, obviously he'd be very leery. But if a reasonable and plausible explanation that has nothing to do with the FHPA were offered, that might comfort him.