“Who Gets the House in Divorce” & Other Common Questions About Separation & Property Settlement
When it comes to divorce, there are a lot of unknowns to deal with regarding finances and division of assets, including the question on everyone’s mind: who gets the house in a divorce?
The outcome of the family home or properties you share with your ex-spouse will depend on a number of factors, as determined by family law, the contributions of each party, the best interests of any dependents from the marriage, and the current and future needs of each spouse (depending on their financial circumstances). This can be a complex and difficult process, which will require legal advice.
What Does the Family Law Act Say?
In Australia, property settlement covers the division of all forms of property following separation/divorce, including houses and other assets, superannuation, and liabilities (referred to as a property pool or asset pool). The law regulating property division, or property settlement, is contained in the Family Law Act 1975 (Cth). The Act assesses the financial and non-financial contributions of each party, as well as their current financial situations and future needs to divide property fairly – taking into consideration any dependents who may be affected.
Binding Financial Agreement
Once the proposed property settlement negotiations are done the agreement can be formalised by either court orders (by consent) or a written agreement is drafted for the parties which will become a formalised legal contract known as a Binding Financial Agreement. A BFA is a private contract between two parties that formalises how marital property and financial resources will be divided. This is a legal document and an enforceable contract, which means if one of the parties is refusing to comply with the terms of the agreement, or both parties wish to overturn the BFA, you will need to go to court.
Binding Financial Agreements deal with property settlements and spousal maintenance only, they do not include parenting arrangements (you will need a Parenting Plan or Consent Orders).
Commonly Asked Questions About Divorce, Property Settlements & Assets
The divorce process has very specific steps you need to follow and all the red tape can be overwhelming for people who are already going through an emotionally difficult time. Inevitably, there are a lot of questions people have about divorce, how property settlement works, and what happens throughout this process.
The most common question, and usually the first question people have, is “who gets the house in a divorce?”. A home is usually the biggest asset the majority of couples share and the one that creates the most immediate impact in the wake of separation, so unsurprisingly, questions about who gets the house and how a property is handled during separation or divorce are the priority.
Here are some of the most common questions clients ask about the house in a property settlement:
How is the house split in a divorce?
There is no formula or rule of thumb that determines how marital property will be divided – it is dependent on the individual circumstances of the parties – regardless of whether they were married or a de facto couple.
The parties (or the court if the parties cannot come to an agreement) need to consider what is Just and equitable split of property with the understanding that a 50/50 split isn’t always an equitable division. Factors to consider include, but not limited to property owned before the marriage or relationship, the financial and non-financial contributions of each party, the best interests of dependents from the marriage or relationship, and the current and likely future financial and parenting position of each party.
In short, the outcome of your property settlement will depend upon your individual circumstances, with judicial determination in this field being discretionary.
Who gets to stay in the house during a divorce?
Legally speaking, both parties are entitled to remain in the house following a separation, regardless of who has legal ownership of the property. Neither party can force the other to leave without a court order. This order is known as an exclusive occupancy order which orders the spouse subject to the order to leave the home until the property has been divided and a property settlement has been reached.
Ultimately, if the view of the parties is that they cannot live under the same roof while separated, then they need to make a personal arrangement.
Do I have to pay half the mortgage if I move out?
If the mortgage of the home is in your name then you are liable for the payment of the loan, regardless of whether you are currently living there or not. If the mortgage is both yours and your ex-partner’s name, then you are both responsible for repayments, regardless of whether either of you is living there or not. A private agreement can be reached in realtion to mortgage repayments esp if one party will be occupying the residence.
Do I lose rights if I leave the marital home?
The short answer is no. Following a separation or divorce, leaving the marital or shared home will not affect your entitlement to a share of the property. Also, you cannot be forced to leave the property in the circumstance the property isn’t in your name unless your removal from the property is court-ordered. For more information, contact experienced family lawyers for advice.
Can you be forced to sell your home in a divorce?
The short answer is yes. If you and your ex-partner cannot come to an agreement about how to deal with your property and one of you refuses to sell, then one of you can apply to the Family Court to intervene and force the sale of the home as part of the property settlement. The order for this is not usually made until a final hearing. This process is the only way you can be forced to sell your house during a separation or divorce in Australia (this applies for both a married couple and a de facto relationship).
How is equity in a property calculated in a divorce?
A house buyout is calculated using the difference between the value of your home and the amount still owed on it to find the equity value.. For example, if your home is valued at $600,000 and you owe $200,000 on it, your equity is $400,000. The equity is then available for distribution.
Family Law & the Mediation Process
There are 6 stages to the mediation process, which are designed to assist separated couples in reaching an agreement that serves both parties’ property interests and financial needs, centering the needs and interests of any dependents first and foremost.
Mediation must have the participation of both parties to be successful and is led by an impartial and experienced mediator, whose role is to assist the former couple to come to an agreement. The stages of formal mediation include introductory remarks, opening statements from the disputants, joint discussion and gathering information, identification of the problems creating barriers to an agreement, defining options and negotiating, and then (if all goes well) reaching an agreement.
Mediation can be a confronting and difficult process, which is why having an experienced mediator assist the process is critical to the success of formal mediation.
Concerned About a Fair Division of Assets During the Property Settlement? Contact BurkeMead Lawyers Today
Separating from a spouse is difficult enough without the financial and property aspects to deal with as well, which is why it’s important to work with legal representation that understands your position and is experienced in family law disputes and mediation.
Director of BurkeMead Lawyers, Emma Mead, is an Accredited Mediator with LEADR (The Resolution Institute), which is an international organisation promoting mediation for conflict resolution. Our legal team of experienced family lawyers will approach each case with compassion and understanding, keeping your best interests and the interests of any dependents front and center.
To book a consultation or inquire about availability, please contact us on 02 4902 3800 or send us an enquiry.
About the Author
Emma Mead is an Accredited Specialist in Personal Injury Law, accredited by the Law Society of NSW. She is also a National Accreditor Mediator and has a Graduate Diploma in Family Dispute Resolution. She specialises in all personal injury and family law disputes, locally and across New South Wales.