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Home › Sell Property › Divorce Property Settlement – Agreements, Division & Laws [Guide]
Thinking about who gets the house (or the mortgage) after a split can feel harder than the break-up itself. That’s where seasoned lawyer Chris Nyst steps in. In the short video below, he unpacks the rules, time limits and cold, hard numbers behind property settlement minus the legal jargon.
In this article we build on Chris’s summary, walking you through the exact steps, calculators and insider tips that can save you thousands (and a stack of stress) when it’s time to divide the asset pool. Whether you’re weighing up a sale, a buy-out or a clean split of debts and super, keep reading to learn how to protect your interests, stay on the right side of the law and move on with confidence.
It is imperative that you ensure your financial interests are properly recognised during a divorce. What will you do with your property?
This article will explore the process and rules surrounding property division and settlement following divorce or separation, guide you through the steps you can take to get the ball rolling, and provide you with tips and tricks to ensure you get the best outcome possible. It will also provide examples of situations that demonstrate how the process works.
Although it is difficult to predict your specific outcome, there are a number of things you can do to ensure the process of property division and settlement is as smooth as possible. Talking to a qualified, professional real estate agent experienced in divorce settlement will help immensely in removing the stress around the divorce settlement process. Our service can assist you in quickly comparing between top-selling agents in your area.
Property settlement is the process by which assets (including any houses) and liabilities (including mortgages and debts) are divided following divorce or separation.
The process of division of property can be either formal or informal. The decision can be made without lawyers involved or by the Family Court of Australia. Formalising any agreement you come to with your former partner about who gets what with the courts (via Consent Orders) is important in order to make the terms of the agreement legally binding, safeguarding yourself from any future claims made by your former partner.
The ultimate goal of property settlement is to separate the financial ties between the couple so that they are independent of one another. It takes into account any property, debts and other financial responsibilities that were obtained during the marriage or relationship.
If you are separating or divorcing from your partner, you will need to sort out how the assets, liabilities and contributions (both financial and non-financial) will be divided to ensure they are maintained. This includes any property acquired after separation but before settlement.
You must act quickly if you wish to divide property because you have up to 12 months following the finalisation of the divorce and 2 years since the breakdown of your de facto relationship to formalise any agreement. If it has been longer than this, you will have to apply to the Family Court of Australia for permission to start the process.
A property settlement agreement is a legally binding contract between divorced or separated individuals that outlines the specific arrangements regarding property division following divorce or separation.
There are two ways to reach a property settlement agreement:
Reaching an agreement without involving the courts will save you time and money, however it may not be feasible in your specific situation. You may wish to instruct a lawyer to act on your behalf before you proceed with making an application to the Family Court of Australia.
The laws regarding division and settlement of property are uniform across Australia. That is, the same laws apply regardless of which state of Australia you are in. You do not have to wait until the divorce has been finalised before coming to an agreement, but do keep in mind the time limit mentioned above to start the process as soon as possible.
Depending on the option you take, the length will vary. You will likely have a much faster resolution if you are able to come to an agreement with your former partner without involving the courts. But if you cannot, and therefore seek to have the court make the decision, then this may take months or years to be finalised due to having to wait for your matter to be heard and for courts to come to a final decision.
Whether you are pursuing option 1 or option 2, here is the process you should follow to ensure you are including everything that needs to be included:
For example, the pool of assets between you and your former partner may be comprised of:
The liabilities may be comprised of:
From this, you may come to an agreement that one will retain the business, and one will buy out the other to own the investment property, or sell the marital home to discharge the mortgage, and any excess monies to be put into child support or spousal maintenance. Then you might apply to the court to have this formalised.
If it is up to the court to decide, then the court will undertake a similar process to the one described above, by assessing the asset pool against the direct and indirect contributions from each party and taking into account future needs and earning capacity.
Ultimately, for the court to make a decision or formalise an agreement, it has to be ‘just and equitable’ in all the circumstances.
Another consideration throughout this process is whether you will elect to sell any of the property you own. This is a common occurrence, particularly when it comes to the marital home.
It is worth noting that making this decision is not simply a case of selling and dividing any money leftover. If you decide to sell a property you own, it will become a part of the pool of assets, which will be considered in reaching an agreement. That is, you will need to factor it in when coming to any sort of agreement with your former partner.
For example, you may come to an agreement with your former partner that the marital home will be sold and used to pay off the mortgage balance. Or you may agree to sell it to reduce some other debt, pay child expenses, or spousal maintenance.
Keep in mind that if you head to the courts to have the decision made for you, then the court has the power to order that you sell your property, regardless of whether you agree that you should do so or not. Therefore it is wise to start thinking about this from the beginning of the process to ensure you have time to bring it up with your former partner and come to an agreement sooner.
Example – Lisa and Sam
Lisa and Sam officially divorced on 2 August 2017. Their asset pool is made up of:
They may agree, or the court may determine that, Lisa is to get 70% and Sam is to get 30%. This is based on each of their contributions and their future needs. In order to divide the property into these proportions, it may be decided that:
Recent example case – Elias & Elias
Mr and Mrs Elias owned a series of assets, including the ‘M Street’ property, valued at $1.4 million and the ‘Q Street’ property, valued at $815,000. They divorced in April of 2015.
Mrs Elias sought an order that Mr Elias pay her a sum of money, and if he did not, she wanted to be appointed as trustee in order to be able to sell the ‘M Street’ property and keep the proceeds.
Mr Elias sought to be declared the sole owner of the ‘M Street’ property and to indemnify Mrs Elias (in effect, buying her out). Additionally, he wanted Mrs Elias to pay him a sum of money and, if she did not pay, he wanted to be able to sell the ‘Q Street’ property and keep the proceeds.
When they eventually realised that Mrs Elias did not have the funds to pay for ongoing proceedings, they sought orders to sell the ‘Q Street’ property, and eventually agreed to, and had formalised, an agreement that authorised Mrs Elias to sell the ‘Q Street’ property.
To ensure your interests are looked after and that you get the most favourable outcome possible, here are some dos and don’ts when going through this process:
Getting divorced is a difficult process and when you add dealing with property into it, especially if you have to sell, it can get more stressful. If you are looking to sell with less stress, the best thing you can do is find a top local real estate agent who has experience in dealing with divorce settlements.
Top agents will be able to help you sell a property promptly and work hard for your sales goals. We’ll compare the top-performing agents in your area and get you in contact with them. We pride ourselves on making the agent selection process as easy as possible, so if you’re looking to sell, get in touch today.
You normally have 12 months from the date your divorce order becomes final (or 2 years after ending a de-facto relationship) to lodge a property-settlement application with the Family Court. Miss the deadline and you’ll need special permission from the court to start.
No. The court looks at the total asset pool, each partner’s contributions (money, parenting, homemaking) and future needs. The split could be 60/40, 70/30 or any mix the court sees as “just and equitable”.
Only if you can’t agree. Most couples work out their own deal, then lodge Consent Orders or a Binding Financial Agreement so it becomes legally binding and neither can make future claims.
It depends on cash flow, borrowing power and tax implications. Some couples sell and split the proceeds; others refinance so one partner keeps the property. A lawyer plus an experienced local real estate agent can help you weigh the costs and market timing.
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