Breaking up with your partner is already incredibly difficult and can become even more so when you own property together. There’s never going to be a one-size-fits-all approach to dealing with the division of property, but there are some basics that are worth understanding.
Legal ownership
Before getting into the specifics of property division, it’s important to understand the concept of legal ownership. In Australia, property can be owned in two main ways: as joint tenants or tenants in common.
Joint tenants are when each partner owns an undivided interest in the entire property. In the event of a breakup or death, the surviving partner automatically inherits the deceased partner’s share.
With tenants in common ownership, each partner owns a specific share of the property. This share can be equal or unequal, depending on the arrangement. In the event of a breakup or death, each partner’s share of the property forms part of their estate and can be bequeathed to beneficiaries.
De facto relationships and marriage
The legal implications of a breakup differ between de facto relationships and marriages. In Australia, de facto relationships are recognised under the Family Law Act 1975, provided certain criteria are met, including a requirement of living together on a genuine domestic basis.
For married couples, property division is governed by the Family Law Act regardless of whether the property is owned jointly or individually. For de facto couples, property division falls under state or territory legislation, unless the couple has entered a binding financial agreement.
Property settlement process
When a relationship ends, it’s essential to reach a property settlement to determine how assets will be divided. This process can be undertaken through negotiation, mediation, or court proceedings if an agreement cannot be reached amicably.
During property settlement negotiations, several factors are considered to determine a fair division of assets:
- Contributions: This includes financial contributions such as income and assets brought into the relationship, as well as non-financial contributions such as homemaking and caregiving responsibilities.
- Future needs: The future financial needs of each partner are taken into account, including factors such as age, health, earning capacity, and care responsibilities.
- Just and equitable: The court aims to achieve a division of assets that is just and equitable in the circumstances of the case.
Property division options
There are several options for dividing property after a breakup, depending on the circumstances:
- Sale of property: In some cases, the most practical solution is to sell the property and divide the proceeds between the partners.
- Transfer of ownership: One partner may buy out the other’s share of the property, allowing them to retain ownership.
- Property settlement agreement: Partners can enter into a legally binding agreement outlining how property will be divided, avoiding the need for court intervention.
Navigating the legalities of a breakup can be complicated so it’s best to seek legal advice so you understand your rights and your requirements.
