Written by: Taylor Wilson
Divorce and separation are not easy. The separation process can be very emotional, especially when property settlement is involved. Even though this process is difficult, taking an amicable approach is always beneficial, especially when children are involved.
Property settlement runs smoother when all parties provide honest, accurate information and maintain realistic expectations from the start. With this in mind, let’s look at what property settlement is and how this process differs from divorce.
What is a Property Settlement in Divorce?
A property settlement splits marital assets between separating partners. In family law property settlements, the term “property” encompasses a broad array of assets. These assets may include:
- Home
- Investment Properties
- Savings
- Superannuation
- Vehicles
- Shares
- Inheritances
- Debts & Liabilities
Property settlements occur when married or de facto partners separate, since the property in both relationships is considered jointly owned.
Two Ways of Settling Property
Broadly speaking, there are two ways property settlements can be reached when parties decide to separate.
1. Consent
The first way to settle property is with consent. Consent means you and your former spouse agree on how to divide the property. You usually formalise agreements by consent with a consent order or a binding financial agreement. You don’t need to go to court if both parties consent to the property settlement.
2. Application to the Court
The second method of settling property is through a judgment or award given by a presiding judge or registered arbitrator. This pathway is reserved for parties who cannot reach an agreement and require intervention from an independent decision maker.
Information Required for a Property Settlement
Generally, the court requires, among other things, the following information and evidence:
- A detailed list of all marital assets, liabilities, income and superannuation, to include agreed values or appropriate valuation evidence in support
- Details of assets, liabilities, income and superannuation that each partner brought to the relationship
- What contributions each partner made to the accrual or preservation of assets etc during the relationship.
- The length of the relationship
- Details of care provided to any children from the relationship
- Details of any personal behaviour that might affect settlement e.g. gambling or drug addiction.
- Age and health of each partner
If this information is provided to your family law solicitor in advance, he or she may be able to mediate an agreement without recourse to court in the first instance.
How Long Does Property Settlement Take?
Generally speaking, property settlements are resolved faster when dispute issues are limited and both parties are focused on resolution.
Property settlements can be resolved by consent in a matter of weeks. If the matter is highly contentious and a party refuses to engage in the process, it can take years to reach a resolution. However, most matters resolve within 3-8 months.
It’s important to understand that divorce and property settlement are unique processes under the Family Law Act. For the most part, these two processes don’t interact. In the next section, we’ll look at how this benefits separating partners.
Can You Do a Property Settlement Before Divorce?
You can reach a property settlement or make an application for property settlement before your divorce application is finalised. There’s no requirement that you do one before the other.
However, parties must be separated for at least 12 months before applying for a divorce. As a result of this requirement, parties tend to finalise a property settlement before they divorce since this process isn’t restricted by a specific time frame.
How Does Property Settlement Work in Divorce with a Mortgage?
If you and your partner jointly own a property with a mortgage and are now separating, you’ll need to address both the property and the mortgage during the property settlement.
If one party will retain the property as a part of the settlement, usually a lump sum cash payment is made to the non-retaining party in exchange for their interest. As the non-retaining party will no longer wish to be a party to that mortgage, the retaining party will need to refinance the debt into their sole name.
If neither party can afford to refinance the debt into their sole name, the property will usually be listed for sale.
If both parties agree to sell the property, the remaining mortgage balance is typically paid off using the sale proceeds at the time of settlement.
Can You Divorce Without a Property Settlement?
You can complete a divorce application without a property settlement; however, it’s generally not recommended. Once a divorce is finalised, there is a 12-month deadline for parties to file for spousal maintenance and/or property settlement. This means, if a property settlement application is not started within that 12-month period, you may lose your entitlements.
You can seek permission from the court to file an application ‘out of time’ but this permission is not always granted. Plus, there you will need to provide a relevant explanation or reason to justify the application delay.
If you have more questions about the property dispute process, call 07 5444 1022 to discuss your matter with a family lawyer.
Disclaimer:
The information contained in this article is for general informational purposes only and is not intended to provide legal advice or substitute for the advice of a professional. This information does not consider your personal circumstances and may not reflect the most current legal developments. Should you need advice, please contact our firm for targeted information relating to personal your situation.
Greenhalgh Pickard’s Family Law Team
