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The Strange Arithmetic Of Deferred Charges

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The Strange Arithmetic Of Deferred Charges

The Strange Arithmetic Of Deferred ChargesMesher and Martin orders, together with their close relation the deferred charge, are usually used only as a last resort. However they do still have a place as a solution in financial remedy proceedings, especially where the only asset of substance is the family home.

In Mesher and Martin orders the non-occupying spouse remains as a legal owner of the home but equitable shares are declared, together with triggering events for the realisation of the non-occupying spouse’s share.

Deferred charges are usually preferred to Mesher and Martin orders where possible, because the property can then be transferred into the occupying spouse’s sole name with the non-occupying spouse being released from the mortgage.

Where there is a deferred charge there is a choice as to whether the non-occupying spouse’s share should be expressed as a percentage of the gross value of the home or as a percentage of the equity. Advisers should be aware that the financial outcomes can be very different. Melanie Craig’s article in the July 2018 issue of Family Law ([2018] Fam Law 889) considers the relative merits of the alternative formulations and points to potential pitfalls for the unwary.

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