The family home, which used to be a shared space, filled with joy, sorrow, and countless memories, becomes a complex asset to address when it comes to separation.
The decision of whether to sell, keep, or consider other options requires careful thought and consideration between you and your former partner. It is a decision that should ideally be made jointly if possible.
Here, we explore the various paths you may consider and the implications of each. There can be creative solutions to suit the unique dynamics and needs of different families.
Selling the property
Selling the matrimonial home is a common choice for many separating couples. It is a way to say goodbye to one chapter of life, split the proceeds, and embark on a new chapter of life. Both of you must agree on key decisions of sale if the property is jointly owned, such as choosing a conveyancer, real estate agent, setting the listing price, etc.
While in a fluctuating market, you may want to make sure the sale is profitable after paying off the mortgage and related expenses to ensure there will be a profit to be divided. If the sale potentially leads to debt, retaining the property as an investment or considering alternative options as introduced below, may be more prudent.
Co-owing the property
Some couples opt to continue jointly owning the house for a period of time post-separation. This arrangement can be temporary and allow children to live in a stable familiar environment until they finish school or another period of time as agreed, or until the market has improved for selling, for example.
It requires cooperation and detailed arrangements should be discussed as to the mortgage repayments, and outgoings including rates, utilities, and eventual sale terms. This option may be suitable for families with school-aged children where you and your partner are amicable and can communicate well about decisions.
Keeping the home
One partner may wish to retain the home, often due to the emotional attachment or if they are the primary carer of the children. This typically involves one partner buying out the other’s share and transferring the property’s title from joint to a single name. The challenge here is ensuring the serviceability of the mortgage, as it will need to be refinanced from a joint name to a single name, only relying on that individual’s income.
This process can be challenging and requires the individual to have an adequate and stable income. It could be a concern for a lot of families especially under the current high-interest rate environment. You may need to consult a financial planner and/or a broker who can assess if this option is open in your financial situation. Child support can be considered an income source in some circumstances, depending on whether there is an administrative assessment in place and how long child support has consistently been paid for.
If there is a court order in place requiring the property transfer, our team is equipped to assist with the process.
Renting out the home
Another option is to keep the family home as an investment property, which may offer an alternative income stream. This arrangement involves both of you moving out and renting the property, with the income potentially covering the expenses. This could be a beneficial temporary arrangement when the market is down or if both of you want to keep it as an investment.
It also requires the communication between both of you to be effective and amicable, as you will be handling the tenants, and liaising with the agent. You also need to agree on how the rental income will be applied and expenses paid, as well as allocating who the property management responsibility will fall to.
Making a decision about the family home during or after a separation is never easy. It can require input from third parties such as accountants, financial planners, mortgage brokers, and, for navigating property settlement matters, experienced family lawyers. The team at R+M is here to assist you.
If you have questions about how the family home should be dealt with post-separation, you should obtain specialist family law advice early on. Contact Robinson + McGuinness to arrange an appointment on (02) 6225 7040, by email on info@rmfamilylaw.com.au or get started now online with one of our experienced lawyers.
Author: Charlotte Wei, Lawyer