What happens to the family home after you separate?

Usually, the most significant asset the parties to a relationship will have when they separate is their family home.  So, it comes as no surprise that when a couple’s relationship breaks down they will often have questions about what will happen with their home going forward.

There is no set rule that a Court must follow when deciding what to do with the family home as part of property proceedings.  Instead, what happens to the family home can often depend on the separating parties themselves, and in particular their ability to reach an agreement with respect to it.

Even where parties may not agree on the amount they should both receive as part of the property distribution, ensuring that the needs of their children are met into the future can often be a significant factor that helps the parties agree as to who should keep the family home as part of that distribution.  Allowing one party to stay in the family home helps provide the parties’ children with as much continuity as possible.

Where parties can agree for one of them to stay in the family home, there are often ways in which their remaining assets can be distributed to ensure that the property settlement remains ‘just and equitable’ or fair.  One of these ways is for the party who will not keep the family home to receive a larger share of the other assets, such as superannuation.  Alternatively, where it is not possible for one party to receive a larger share of the other assets in lieu of a share of the family home, the parties may agree that the sale of the family home be delayed until the children leave home or the party staying in the family home remarries.

What happens when you can no longer live under one roof?

Where parties have separated and are no longer able to live under one roof, then interim arrangements can be put in place whilst they try to finalise their property settlement.  This can include agreeing to use resources from the relationship to enable one party to move into rental accommodation, whilst the other remains in the family home.

Where the parties are unable to reach that type of agreement, the party wishing to stay in the family home can apply to the Court for an order granting them ‘sole use and  occupation’ of it.  To do this it will be necessary to demonstrate to the Court that it is unworkable for the parties to remain living under the one roof, and that there are  resources available to fund separate accommodation for the other party.

When the Court needs to step in

Where parties are unable to agree as to who will retain the family home, then the Court has the power to deal with that asset as part of the property proceedings.  In determining what to do with the family home, the Court may order that one party be entitled to retain it at a value that has been agreed or as otherwise assessed by a valuer, with this value to be deducted from their overall entitlement.  Alternatively,  the Court may order that the family home be sold, and the net proceeds from that sale be divided between the parties in shares determined by the Court as being ‘just and equitable’.

Who pays the mortgage after you separate?

If the family home has an outstanding mortgage, arrangements will have to be made for the loan repayments to be paid whilst the parties are trying to finalise the distribution of property from their relationship.  Where there are financial resources available, such as savings, from which the loan repayments can be made, the parties may agree to use those funds to ensure the mortgage does not default.  Depending on the circumstances of the agreement reached by the parties, those repayments may be taken into account when their property proceedings are finalised.

Where the parties cannot agree on the use of financial resources to pay the mortgage whilst they are still finalising the distribution of property from their relationship, it may be possible to apply to the Court for an order enabling those funds to be used.  Alternatively, where one party has the capacity to do so, it may be possible to apply to the Court for an order that that party make the mortgage repayments, even if they are not living in the family home, until the property proceeding is finalised.

In circumstances where neither party has the capacity to make the mortgage repayments after separation, or where there are no financial resources from which the repayments could be made, the parties may need to consider approaching their bank to advise them of their separation.  Often financial institutions can offer separating parties a period of time during which the loan repayments can be put on hold, or otherwise reduced.  Where the parties’ bank does not offer such an arrangement, it may be necessary for them to consider selling the family home.  Where the sale occurs prior to the property settlement being finalised, the parties can agree to distribute those funds, or some of them, between themselves. Alternatively, in the absence of an agreement about the distribution of the sale proceeds, the parties can arrange for the funds to be held on trust by one of their solicitors until the matter is finalised.

Tailored Expert Family Law Advice

Whilst this article is intended to provide a general overview of the process that a Court may adopt when deciding how to deal with the family home, each cased turns on its own facts, and there are a number of factors which can significantly impact on the Court’s decision.  At Frigo Adamson Legal Group we can provide you with expert family law advice that is tailored for your circumstances.  Contact our office to arrange your free initial one hour consultation on (07) 5661 9719 or info@falg.com.au.