Who pays the mortgage? Who pays the legal fees?

When I see new clients embarking on a separation, one of the first questions will be who will continue paying for what, and who is responsible for the legal fees.

Mortgage and household costs

In relation to the payment of the mortgage, there are various answers to this.  If there is already an established status quo that one spouse meets the entirety of the outgoings on the former matrimonial home, it does not necessarily follow that this will continue post-separation and once a settlement is reached or an order made.

When spouses are separating, they are dividing up their community of finance which they created upon marriage.  That asset pot now needs to be shared; this often means that funds available to meet the needs of one household, now need to be shared to meet the needs of two.

In reality, if for example, the higher earner is able to meet the outgoings on the former matrimonial home and move out, then the court would expect that to continue, in particular if he or she is to protect their entitlement in that property as a joint owner.  However, the reality for many divorcing couples is that there is not enough money to meet the outgoings for two households and so the finances need to be revisited and cutbacks need to be made to meet the deficit.

Legal fees

In relation to legal fees, in matrimonial proceedings in this country, it is normal for each spouse to meet their own costs, unless an agreement can be reached between the parties; or if one spouse was in a far stronger financial position than the other – if no agreement is reached then it is open to each party to make an application for what is known as a legal services order.

It is becoming increasingly difficult to be awarded a legal services order, there is very strict legislation which governs the making of such orders.  Parties have strict criteria that they need to meet before a court can be satisfied that such an order should be granted.

It is not only based on the applicant spouse’s need for funding, but also the prospective “payer”, the respondent spouse being financially able to meet the terms of that order. The court expects the applicant to have been rejected by 2 commercial lenders and to have attempted to borrow from family and friends before considering making such an application.

There are also now litigation loan providers who will lend to clients to fund their litigation based on their share of a property, which is similar to a secured loan.  Again, there are very strict criteria in obtaining such a loan, the terms of which can be seen as onerous, but the harsh reality for many divorcing couples is that they are often left with little choice.