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Working out what to do with the family home

By April 8, 2019February 23rd, 2024No Comments

Your joint residence—should you leave or stay? Sell or keep it? Working out what to do with the family home is usually both an emotional and financial decision. Typically a couple’s largest asset, the value of the family home is included in the asset pool, but deciding exactly what to do with it is often influenced by much more than its value. If the home has a lot of history and sentimental value and contains memories and emotional connections, it can be hard to part with it even if that makes the most financial sense. On the other hand, if you are desperate to keep it, banks can often help work out arrangements to make that possible.  But if you are going through property proceedings in the family court system, it is the court who will decide how your marital assets are divided up, including whether the house is going to be sold.

To clarify a common misconception, the family home forms part of a couple’s shared asset pool, and is included in the schedule of assets and liabilities, regardless of whose name it may be in or who is the one who moved out. In other words, just because you have moved out of the family home does not mean you have less of a claim to it in the property settlement.

When considering property-related divorce issues, it’s important not to agree to sell or sign anything without first getting expert advice. Access the resources that exist to help—services for singles or excellent financial advice–and really take your time to think it all through. Seek legal advice, even if your separation is amicable, and even if things are amicable now, things can change.

To secure your finances after a split, it’s recommended you see your bank as soon as possible after the separation to ensure joint accounts are made dual-signatory (where transactions are only permitted with the signature of both account-holders). It also makes sense to open your own private account. You may even be eligible for Government income support or other assistance payments through Centrelink depending on your circumstances and level of hardship. If you’re separating later in life and nearing retirement, Centrelink can also help with age pension planning.

Most banks understand that relationship breakdowns happen and have ways to assist customers going through a separation. They may agree to change the terms of a mortgage so that you have better cash flow for a time. So it is important to let your bank know of your circumstances as soon as possible and see what options they can offer you. Depending on your unique circumstances, they may lower mortgage repayments for a certain time period – a “mortgage repayment pause” for people who are ahead on scheduled payments. Payment reductions (sometimes as high as 50%) for a certain time period might also be available. You may even be able to switch your mortgage from principal plus interest to interest only.

The possible outcomes in a property settlement

One spouse buys the other out

If one of the parties wants to remain in the family home, one spouse buys the other out. You’ll need to either agree on the value, or have it valued by an expert. Often, separating couples will decide that the spouse that is staying in the home must refinance the mortgage into their sole name (if they have the credit and assets to be able to do that) to make sure there is a ‘clean break’.

You both sell the property

Both parties divide the proceeds of the sale. This is usually the cleanest split of equity in a family home, but carries associated issues such as capital gains tax. The parties also need to ensure they have a good credit history so they can easily find a new home (whether to purchase or rent). If you agree to sell, both you and your spouse should be involved in picking the real estate agent and the sale process.

You agree one party is to keep the property in an asset swap

Such as if you also own an investment property.

You both keep the property for a certain time, one party lives there

If you wish to maintain joint ownership of the property, sometimes due to kids of the relationship still being at home, you may both keep the home for an agreed length of time.  You and your spouse will need to make a legally-binding arrangement regarding the mortgage repayments, household expenses, maintenance and repairs, and so on. Drawing up a rental agreement might also  be a good idea.

If you decide to sell your family home, consulting a family lawyer as well as a financial advisor is a good idea, because of the many variables involved (such as the changing property and financial markets and regulatory environments).

Reaching agreement on the family home can take time so bear in mind the time limits in family law. As soon as you are separated you can immediately begin negotiating a property and financial settlement—there’s no need to wait til you are officially divorced. But do note there is a default time limit of 12 months to start court proceedings once you are divorced.

Would you like any assistance resolving legal aspects of your separation or divorce? We are skilled at generating an amicable property settlement which safeguards your interests as you wind up your mutual financial affairs and regain independence. Please contact Canberra family lawyer Cristina Huesch or one of our other experienced solicitors here at Alliance Legal Services on (02) 6223 2400.

Please note our blogs are not legal advice. For information on how to obtain the correct legal advice, please contact Alliance Legal Services.

Useful links:

Centrelink’s Financial Information Service

ASIC’s guide to financial aspects of separation and divorce


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