Property and Finance Considerations After Divorce in Australia

divorce law

Divorce is a difficult and challenging process for any two people. It can be one of the most trying situations for people and their loved ones, and it can also be incredibly complicated. Not only is divorce emotionally taxing and complex, but it is financially complicated as well.

In Australia, many laws on divorce define which party is owed which assets, and it is vital to know these laws when getting divorced. However, it can be tricky for the real estate agents and the divorce lawyer to decide who owns what property.

This article will break down what rules, laws, and regulations real estate agents must know to make any divorce case easier for them and their struggling clients.  

The basics of “Family Law”  

family law

A critical distinction about Australian law is that although there are divorce laws and regulations, they are part of a more significant law act called the Family Law Act (or simply The Act).

This act falls under laws governing divorce, marriage, care of children, adoption, guardianship, and property settlements. The Act introduced in 1975 establishes a concept of “no-fault-divorce” that defines what is necessary to ask for a divorce. The Act states that the only acceptable grounds for divorce is, “irretrievable breakdown of marriage, evidenced by a twelve-month separation immediately preceding the date of the filing of an application for divorce.” Meaning that the court does not account for why the marriage might have ended. Instead, if the marriage has broken down for a continuous period of at least 12 months, there is no reasonable evidence that the two parties will ever get back together.

The Family Act is about defining the separation that has already been occurring in a relationship and this acts as the prerequisite for divorce.  

Which court carries out the division of assets after divorce in Australia?  

family court of australia

Two types of court typically deal with divorce: the Family Court and the Federal Circuit Court. In both of these courts, you can file for divorce, but there are differences between them that deal with the level of severity of your separation.

The establishment of the Federal Circuit Court was originally to help the Family Court so that the Family Court could have more time to assess more complicated family issues. This usually means that the Federal Circuit Court deals with more cases than the Family Court.

Both adhere to different rules established in different years, Family Court rules in 2004 and the Federal Circuit Court in 2001. 

Another difference between these courts is Family Court requires a series of steps to qualify. Prerequisites and screenings are needed for Family Court while no such barrier exists for Federal Circuit Court. It is also important to note that the fees associated with the hearing of each court are different.

Fees for Family Court are typically more expensive as they take more time to deal with the issues, usually around $860. While the Federal Circuit Court fees only cost about $630 for a hearing, making it a little more accessible for families.  

How are assets split?  

assets split

A clear distinction any person should make about divorce is that divorce and property settlement are vastly different legal processes.

They do not necessarily go hand in hand, and assets can even be split while the two parties still live together.

Australian laws are different than the rest of the world because they follow the equitable distribution of assets, meaning property and wealth are not split evenly. Property evaluation is explicitly calculated in a four-step process defined by section 79 of The Family Act.  

  1. Step 1: Valuing the Assets. This means that all parties’ assets are collected and valued based upon whether they were obtained before, during, or after the marriage. This can include liabilities like mortgages, debt, and personal loans. These assets are split between the parties, including future investment properties that can net one or both parties additional assets.  
  1. Step 2: Valuing the Contributions of Each Party. Once the total amount of assets is collected, both parties’ financial and non-financial contributions are assessed, and the contribution percentage is taken into account. The Family Act states that “Financial contributions include and direct or non-direct contributions to the acquisition, conservation or improvement of any of the property of the parties or either of them and can include real estate, cars, income, gifts, inheritances, redundancy packages, compensation, dividend payments and more.”  
  1. Step 3: Calculating Future Needs. This step is relatively straightforward as both party’s future needs are assessed based on disability, age, income, care and support of children, and financial circumstances. The court will decide if any adjustments need to be considered when discussing each party’s assets during this stage.  
  1. Step 4: Considering The Practical Effect. This is the process phase where the court decides if the above steps are equitable and just in all cases. Once the court gives its approval, the decision is final, and the assets are split.  

Managing property sales during divorce  

selling property during divorce

In divorce cases where both parties are named on the property, it can be difficult for real estate agents to deal with the situation. One of the most important things for a real estate agent to do is acknowledge that both parties are different and require different things from you.

By asking questions and having an open line of communication with the separating couple, you can avoid one party thinking you favor the other. Instead, you can bridge the gap and create an accurate idea of what each individual wants.  

Another issue you should be aware of is if you need a consent order or financial agreement to consider. These types of arrangements can be in place and have legal ramifications if broken, so be sure to ask both parties if their separation is final or ongoing. Getting a copy of these financial orders can also be beneficial for you as an agent as you will know the grounds of their finances and minimize disputes between the parties. 

Finally, it is sometimes essential to get the family lawyer involved as they can offer the third party perspective you need to deal with the separated couple. Asking the family lawyer questions and keeping them informed of both party’s correspondence gives both you and them the opportunity to communicate transparently between all parties and maybe even offer insight not considered before.  

Regardless of the reason, divorce is a challenging process for any individual. Working with the separated couples and their lawyers can ensure you have an easy time dealing with the assets and understanding the financial ramifications to come to a mutually beneficial separation agreement. 

About Real Estate List Provider

Gain access to any suburb in Australia for an extremely cost-effective prospecting and real estate marketing lead solution. One price for any suburb in Australia, regardless of how many real estate leads there are. Radius Suburb will provide you with highly valuable, washed data to help generate real estate marketing sales leads with higher conversions.

'Property and Finance Considerations After Divorce in Australia' have no comments

Be the first to comment this post!

Would you like to share your thoughts?

Your email address will not be published.

Phone: (08) 9223 2400
Free Fax: 1800 999 019
© 2019 PrintForce Australia Pty Ltd.