“Possession is 9/10 of the law.” This common saying is largely true when it comes to property and divorce.
First and foremost, do not succumb to pressures from your ex-partner to sell your home. It is really important that you consider the items below and consult your lawyer before putting your house on the market, relinquishing tenancy or moving out. You have many options available and with expert help you can negotiate a suitable outcome for everyone involved.
If you have children in the marriage and you are planning to be the Live-With Parent, then it is in the best interest of the children for you and them to stay in the family home. It means less disruption for the children, a feeling of greater stability and it also means that the children can continue at the same schools and extra-curricular until further agreements are made. Often (but not always), the Live-With Parent is awarded the house. However, depending on your individual situation, you may have to part with other assets.
The Live-With Parent can generally expect between 60-80% of the asset split. Understandably, if other agreements around education, extra-curricular, medical and other are made, you may not be entitled to such a high percentage.
Should you be fortunate enough to have more than one property, it would be favourable to both parties if the Spends-Time With (STW) Parent can occupy one of the properties until the financial settlement is arranged.
If a settlement on the house is required, options that have been exercised in the past, include:
Property Valuation. There is often a thought that the property/house is valued at date of separation. This isn’t entirely true. Unless agreed, despite getting a valuation by an independent and licenced Valuer around the date of separation, it isn’t until the financial settlement occurs that the value of the property is applied. If you are in the situation of living in the house, with a view of it being in your ownership post financial settlement, I recommend that you do not invest in any capital improvements. The more value you build into the property the more equity there is to split. In the meantime, both parties, if named on the mortgage, are liable for the mortgage repayments, even if only one party is living in the house.
When I separated, I was in a small run-down property. I had it valued around the date of separation, however, during the period of coordinating a financial settlement (it took me three years), the general property values sky-rocketed. I wasn’t able to paint my house, fix the flooring, renovate the kitchen or improve the exterior of the house. While some of these items are small, they do add to the overall value of the property and equate to a greater value of asset which is included in the financial split. It was a lengthy and frustrating time to be living in poor living conditions.
Get a financial settlement ASAP. If you don’t have a financial settlement, did you know that your ex-partner has 12 months from the date of divorce (not separation) to contest the property? Furthermore, did you know that any asset or debt you or your ex-partner acquires during separation can be included in the financial settlement whether you want it to or not? Understandably, in some cases, the parting couples may need to work on the parenting orders first which, depending on individual circumstances, may affect the property settlement. Don’t forget, if you come to a mutual agreement, you must lodge the agreement in court to make it final. If it isn’t lodged, your financial settlement is still open for dispute and potentially re-distribution.
Do not sell any property without the written consent of the other parent. As a part of the settlement, you are likely to need both signatures to discharge the mortgage. There are financial ramifications for you if you are not able to settle (and discharge the mortgage) on the agreed date with the new purchasers.
If you do have to sell the family home, do not split the profits until you have a financial settlement. Perhaps you can both agree to take a small sum of money to put up a bond on a rental property each, however, anything larger than that can be detrimental the financial settlement of the case. Put the profit from the sale into a trust account with a solicitor or the real estate agent or set up an account at a bank that needs dual signatures to access the money. While not having the cash early will be difficult, you will be grateful if you are entitled to the larger percentage.
Don’t hide the proceeds of sale. Be transparent. Don’t spend the proceeds of sale from your ex-partner. Judges don’t look favourably on parents who “hide” marital assets.
Get motivated to coordinate your financial settlement!