Four key facts you need to know about your property settlement

What is Property Settlement?

When a de facto relationship or marriage comes to an end, both persons must agree and finalise their financial ties. Things to be considered at this time are the transferring of real estate ownership, cash, superannuation, and other assets from one person to the other. An example of this is when a house or property that is in both names (joint) is decided and agreed to be sold and the proceeds are divided in either an equal or different agreed amount. It can also mean that one person receives the house in full though pays cash or provides other assets to buy out the other parties’ interest.

It is important when separating to consult a qualified lawyer that specialises in Family law. This lawyer will among other things assign a valuation company such as GANTPMV to apply unbiased valuations on all the assets held within the relationship.

Formalising your property settlement?

No matter whether you and your partner left on good terms or not, any agreement reached between the pair should always be formalised, meaning it is legally recorded. When it comes to a property settlement agreement between two parties, there are two ways of legally recording.

Consent Order – This is when both parties agree to an order, which is then analysed by a court registrar before it becomes official to ensure that the agreement is both equitable and just.
Binding Financial Agreement – This is when two parties agree to an order, but it has not been analysed by the court.

Before deciding which legal recording is best for you, you should first talk to your solicitor.

Why do you need to formalise a property settlement?

There are a number of reasons why it is important to formalise any agreement:

Both Binding Financial Agreements and Consent Orders are legally binding. Therefore, if one party breaches the agreed-upon terms, the other has the right to take the case to court in order to enforce the terms.
Both Binding Financial Agreements and Consent Orders confirm the financial relationship between the two parties. This ensures that one party cannot then make another settlement claim against the other in the future.

Why should property settlement be done as soon as possible after you separate?

Unless you sort out your property settlement agreement soon after you officially separate, you leave yourself open to future claims as your financial ties remain open.

Against popular belief, the courts do not determine the property settlement entitlements of each party from the date of the separation. Instead, such analysis is conducted either on the date of the agreement or the date of the trial if it goes to court.

Therefore, any positive interest growth, new assets, asset improvement, or the like are all included in the property pool even if they were attained after the separation.

By sorting out your property settlement agreement promptly after the separation, you remove the risk of leaving yourself open to post-separation entitlement splits.

The same logic applies to sales or wastes too. If your ex-partner either sells or wastes funds/assets after the separation but before the agreement/trial, applying the income to their own benefit, it is reduced in terms of the property pool entitlements. In short, the court cannot analyze assets that do not exist anymore. However, it is important to note that the court does have the power to take financial contributions or wastage into account after the separation.

It is always in your best interests to agree upon a property settlement as soon as possible when separating in order to confirm your financial situation without any unknown changes hanging over you.

The information in this blog is accurate at the time of writing. However, it is important to note that laws can change, which could affect the information. This information is general and not specific to any particular person or scenario. Please talk to a legal advisor before acting on any of this information.