You and your spouse have decided to call it quits. Now you’re looking forward to starting a new life apart from your spouse. There’s just one problem.
You both still live in the same house.
This begs the question: How do you divide property in a divorce — namely your marital home?
Trying to split property, like a house, in a fair manner can understandably be confusing in Queensland. However, the right property settlement solutions can lead to a mutually satisfactory outcome for you and the other party.
Here’s a rundown on the facts you need to know about property settlement in Melbourne.
Let’s jump in!
How Do You Divide Property in a Divorce?
When splitting property during divorce, it’s critical that you take into consideration multiple variables before choosing the right settlement solution.
For instance, do you and your future ex-spouse have children? If so, are they minor children, and with whom will the children likely live following the divorce?
Also, consider your income and whether you’d be able to cover a mortgage payment while the other party lives elsewhere.
Other important considerations include how close the family home is to your family members, your workplaces, and the children’s schools.
All in all, make sure that the choice you make reflects both sides’ priorities and wishes.
Doing a Buyout as Part of Your Property Settlement
One option when splitting property during divorce is to do a buyout. This is possible if your marital home is in both parties’ names rather than just one individual’s name.
In this situation, one person will transfer the home to the other person through a binding agreement. The person who keeps the home will be responsible for covering the mortgage going forward. In addition, they’ll purchase the other party’s financial interest in the property.
For example, let’s say there is $100,000 equity in the home. The spouse who keeps the home has to pay 50% of this — or $50,000 — to the other party.
Note that there must be enough assets other than the home for this buyout to work. In addition, the person who keeps the home must be capable of paying the mortgage by themselves going forward.
Note that the mortgage lender must approve of the decision that you and your spouse make. For this reason, it is generally not wise for the non-working spouse to keep the home.
Selling the Property
Rather than doing a buyout, you and the other party may opt to simply sell the house instead. Your legal agreement should ideally dictate an agreed-upon deadline for your home sale.
Selling the house is an especially smart choice if you’re currently in a seller’s market. In this situation, you increase your chances of making a profit, which you can then split as part of the divorce process.
Note that if your home sale happens before you’re able to finalise your divorce property settlement, you can place the proceeds of your sale in a secure trust account.
But what happens if your house ends up selling for a smaller amount than your mortgage’s value? If this scenario occurs before your other assets are divided, you’ll likely need to discharge the mortgage utilising other funds from your matrimonial pool.
If you can’t use other funds to help you in this situation, then the mortgage may simply follow you and the other party until you repay it. Alternatively, you may need to fill out your lender’s hardship application to receive the financial relief you need.
Sharing the Home with Your Ex-Spouse
Yet another property settlement option during divorce is for you both to keep owning the property. In this case, just one spouse may live in the property.
This generally isn’t a feasible idea, however. That’s because you would have to be okay with locking up your equity in the marital home. This is equity you may need to buy another home if you’re not the one staying in the house.
Also, if you pass away, the title will automatically transfer to your ex-spouse. This may not be your desire if you’ve updated your will to allow another person to be the beneficiary of your interest in the home instead.
Can You Get a Divorce Before Property Settlement?
Yes. It is not necessary for you to sell the home or transfer the home to one party right away.
The common misconception is that two divorcing individuals must get their divorce order prior to dealing with their home sale. The truth is, you can’t actually apply for such an order until you’ve been separated for a year. However, you are free to transfer or sell your marital house at any time.
Still, it’s not uncommon for divorcing individuals to wait until they have binding financial agreements to sell their marital homes.
How We Can Help You to Split Property Through Our Property Settlement Solutions
If you’re asking “How do you divide property in a divorce,” we can provide you with a clear answer for your unique situation as you navigate the divorce process. Specifically, we’ll go over all of the property settlement solutions available to you and help you to choose the best ones for your needs.
We are dedicated to helping you to obtain a personally favourable property settlement considering the circumstances surrounding your divorce in Queensland.
Get in touch with us today to learn more about how we can help you to split property in a way that will benefit you long term.
Please note the contents of this post is information only and not legal advice.
If you require legal advice it is best to contact one of our lawyers who can review your particular circumstances and then provide tailored advice according to your needs.