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Who gets the house in divorce: A comprehensive legal guide
One of the most common questions we get from separating couples is ‘who gets the house in a divorce?’ We understand why.
The family home is one of the biggest assets a couple will share. But it’s also the source of a lot of memories. So, while it’s a huge financial decision, it’s also an emotional one.
So, what does the law say about who gets the house after a divorce in Australia? Here is our comprehensive guide.
Who gets the house in a divorce? What does the law say?
The law governing the splitting of assets – including the family home – is contained in The Family Law Act 1975 (Cth) (the Family Law Act). However, the Family Law Act doesn’t set out precisely what should happen to your family home, or any asset. Instead, the home (and all assets) become part of the marital property pool, which is then divided as part of the overall property settlement.
How does property settlement work?
Property settlement in Australia is simply the process of formally dividing the marital property following a couple separating. While this sounds simple, the process itself can be quite complex.
It starts with determining what money and assets should be part of the marital property. In almost all cases, the family home will be part of this property pool, even if one partner paid most (or even all) of the mortgage and even if the house is only in one person’s name. This is because your house is typically purchased for the benefit of the entire family and used in this way.
Once the property pool has been set, property division can begin. In Australia the Family Law Act requires that all property division made by the Family Law Court (the Court) be fair and equitable in the circumstances. So, there’s no set formula for deciding who gets any part of the property pool, including the house. Every situation is decided on its own merits.
Dividing your property outside of Court
It can often be in your best interest to try to negotiate the division of the property pool, including the house, with your ex outside of the Court system. This can be done via negotiation with the help of your lawyer, or through mediation (or some other form of family dispute resolution), if needed. Both these options are generally more affordable, faster and will lead to more amicable relationships in the future.
If you do go this route, you will definitely want to set out any agreement you come to in a binding financial agreement. To be binding, the agreement must meet certain technical requirements, and our team can certainly help with this.
What about your investment/rental property?
People also often wonder who gets the rental house or investment property in a divorce? Just like your family home, rental properties are considered part of the overall property pool and will be divided as part of that pool.
However, it’s less likely to be given the additional ‘emotional’ weight a family home would simply because it’s not the family home. So, while the family home might be provided to one party over the other because they have more childcare responsibilities, the same won’t hold true for any rental properties. They’ll simply be treated as another generic asset.
Going to Court for property orders
If you aren’t able to come to an agreement about how to handle the family home in your divorce, or how to divide any of your property, with your ex-partner, you’ll need to go to the Court for final consent orders.
When the Court is required to make a decision about how to divide your property, they will take certain factors into account in order to divide the property in a fair and equitable manner.
1. Assets and liabilities
The first thing the Court will look at is all the assets and liabilities of you and your ex, both together and individually. This is what you own, what you owe and the value of those things, including your family home. This forms the basis of your property pool.
2. Financial and non-financial contributions
The Court will then examine all the contributions made by you and your ex-partner to the relationship. This includes financial contributions, such as real estate, income and superannuation, and non-financial contributions, such as domestic duties, childcare and even supporting your ex during schooling.
Both financial and non-financial contributions are important, and the Court considers them so.
3. Length of the relationship
How long you’ve been with your partner can influence the ultimate division of your assets, including your home. In longer relationships, assets tend to be more intertwined, which can lead to a more straightforward division of property. In this case, if one party is given the home, the other might be given more of other assets, for example.
Shorter relationships might lead to more complex division, as the Court will more closely look at what each partner brought into the relationship.
4. Future needs of each partner and the family
The future needs of each partner, and their family, will be a critical factor in the Court’s decision-making process, particularly when it comes to who gets to keep the family home. They’ll look at things like who bears the bulk of the childcare responsibilities, how this impacts their potential earning and living expenses, any health issues or disabilities, and any other circumstances that could impact future financial needs.
For instance, if you have primary custody of the children, you might have a greater future need to remain in the home. This will play into their decision-making process in order to ensure that everyone is treated fairly and equitably.
5. The financial impact of the divorce
Sometimes a divorce will impact one person more than the other financially. This may be because they earn far less money (or no money), or because they have more responsibilities for the children.
The Court will consider the financial standing of each party after the divorce and make adjustments to the property division to address any imbalances. This may include who gets the house in the divorce.
Expert advice here!
If you’re in the process of separating or divorcing and have any questions about who gets the house in a divorce or property settlements in general in Australia, get in touch with our expert team.
