I’m Separated, Can I Buy a New Property?
Here’s the thing about splitting up. Even if the reason for your separation was fairly straight forward and you are on decent terms, you may find life is complicated. In most cases this is because you must still make certain decisions about children and the division of property. You may also need to find a new place to live. If so, you may be wondering if you can buy a new property.
Do not consider buying until you have completed formal property settlement
Technically, there is nothing preventing you from buying a new home as soon as you and your partner split up. However, experts warn against doing so prior to completing a formal property settlement. There are two reasons for this. First, a formal property settlement legally severs your financial ties. Secondly, any property you buy prior to the completion of this process may spark further debate.
To illustrate how this could happen, consider the following. Supposing you and your spouse were together for more than a decade, and have been separated for nine months. Soon after the two of you parted ways, you met someone new. One thing led to another, and you and your new beau bought a house together. Just when it seemed as if life could not get any better, your ex commenced the property settlement process.
Among other things, this means that you must now make certain disclosures. Because the new home is now part of the property pool subject to division between you and your ex. Specifically, you must disclose certain loan information, the purchase price, ownership details, the address and so on.
In a worst-case scenario, your ex may even to make a claim on your new property. Of course, there is no guarantee he would succeed. Then again, there is no guarantee he wouldn’t succeed, either.
How is property divided during settlement?
A couple’s total assets for the purposes of property settlement include all real estate holdings, investments, bank accounts, real estate, superannuation, and shares. When applicable, the value of any business and the value of interests in companies and trusts is also included in the total asset pool.
A complex evaluation is then done to determine who contributed how much to the total asset pool. The next step is a separate evaluation of each person’s financial needs going forward.
Based on these assessments, the total value of the assets is reflected as a percentage to be divided. Then more calculations are done to determine how each person gets their share. Numbers are generally adjusted based on who wants to keep which assets, or who has acquired new assets.
Are there any deadlines for initiating property settlement?
The answer to this particular question is yes… and no.
If you wish, you can start trying to resolve any outstanding property issues as soon as you are separated. There is no “cooling off” or waiting period.
However, you must apply to the court for property orders within a specified time.
- Married couples, must file the application within 12 months of the date on which the Divorce Order takes effect.
- De-facto couples must file an application within two years of separation.
If you do not meet these deadlines, you risk being barred from seeking such an order from the Family Law Courts. Having said that, the Family Law Courts sometimes grants permission to commence proceedings after the deadline has elapsed — but only in limited circumstances.
What if we reach an informal agreement?
If your separation was amicable, there is nothing to stop you from trying to reach a property settlement agreement on your own. In truth, courts tend to prefer if parties can reach consensus independently or through mediation. However, experts also urge separated partners or spouses to formalise any such agreement. This can be done through Consent Orders through the Family Court or a Financial Agreement.
The bottom line
Once you have separated you may be tempted to move on with your life rather quickly. In some cases, this may mean purchasing a new property. Depending on your circumstances, this may be a home where you plan to live alone, with your kids, or even with a new partner.
As we have discussed, however, it is best to wait until after you have completed the property settlement process. This will protect you financially, and likely prevent some costly and unpleasant complications.
It is also important to consult an accredited family law specialist at this stage. Regardless of your location in Australia, if you are separated and considering buying a new property, talk with one of our family lawyers today!