It’s often the most significant asset anyone is likely to accrue in a lifetime but what happens to the family home during and after divorce and separation?
Not surprisingly, family lawyers are frequently asked to advise on concerns separated couples have about the family home, and ownership of it, in the event of separation.
There are several options available to separating couples in the division of what is likely to be their most valuable asset.
For most couples, the family home is usually the major asset to be divided up in a property settlement.
When it comes to the division of property assets, there is no set formula and what becomes of the family home often depends on the divorcing couple and their ability to reach an outcome that suits the couple, the children and meets the needs of both parties.
Who Leaves? Who Stays?
In situations where one spouse cannot not live under the same roof as the other while the property settlement is being finalised, a ‘holding pattern’ can be agreed where resources are made available to one spouse to take rented accommodation in the interim.
Where an agreement cannot be reached, the spouse wishing to occupy the family home can apply to the Court for an order granting them ‘sole occupation’, provided they can demonstrate that it is unworkable for the spouses to remain living under the one roof and that resources are available to fund separate accommodation for the other spouse.
Buying the ex-partner’s half
As to what the final property settlement might look like, it is possible for one spouse to buy the other out and keep the house or the property can be sold and the proceeds divided.
Keeping children comfortable
Often in situations where there are children, one parent will want to stay put to provide as much continuity as possible. In this instance, other assets (e.g. superannuation) can be considered to even up the distribution or the sale of the property can be deferred until the children leave home or the spouse remarries.
If there is agreement between couples, it is possible for one spouse to retain the title to the family home as ‘credit’ towards their property settlement entitlement.
When the Court needs to step in
If there is a dispute between the couple as to who will retain the family home, then the Court has the power to order that one spouse be entitled to retain it at its assessed value, with this value to come off their overall entitlement, or that the property be sold, and the proceeds of sale divided between the couple as determined by the Court.
Dealing with loans and repayments
If the family home is encumbered by a housing loan, spouses seeking to retain that home will need to be able to demonstrate that it is realistic for them to do so, for example, that they can re-finance that loan into their sole name so as to release their spouse from debt.
Things to Remember
If you are investigating divorce and house ownership, Jones Mitchell Family Lawyers Associate Ailsa Day recommends you consider:
1. The value of the family home
Where couples can agree on value of the family home, this agreement can be recorded and the family home can be built into the property settlement at that agreed value. Where couples can’t agree, experts can be called upon to determine the current market value of the property.
The Court generally prefers that such valuations be prepared by a single expert, based on joint instructions from the separated couple, and at their joint expense. Where there is competing evidence as to valuation) the Court must decide which evidence it prefers, and if it is unable to do so, it can order the sale of the property to be determined by market value.
2. Home ownership
Irrespective of whether the family home is registered in the name of one or both spouses, it can be the subject of property settlement orders after separation. However, it is important to take advice to ensure that this important asset is preserved while a property settlement outcome is determined. Where the title to the family home stands in the sole name of one spouse, advice should be taken about seeking an undertaking from that spouse not to encumber it, or deal with its title, until a final outcome is in place, and failing that, about registering a Caveat over the title of the property or seeking orders restraining any dealings with it.
Early steps may need to be taken (in seeking orders from a Court) if there is any evidence to suggest that the spouse who is the registered owner of the property has implemented, or intends to implement, any transaction which will remove it from the asset pool, diminish its value, or otherwise affect the property settlement outcomes.
Irrespective of which spouse occupies the family home during the settlement period (either by negotiation or via litigation) the family home will still be in the property settlement asset pool, and the Court can still make orders as to its future ownership. This is the case whether it stands in the name of one spouse, or both spouses.
As always, we strongly encourage you or your loved ones to make sure any agreements are formally documented by a practising lawyer to avoid disappointment and unnecessary cost and stress.
Note: This article was previously published in 2014 and has been subsequently modified to more accurately reflect the process as it stands in 2019. As such, this should be viewed as the ‘2019 edition’.