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What happens if we both want the house in a divorce?

October 25, 2024

Often separating couples struggle to agree on how to separate their assets. This article explores what happens when both parties want the house in a divorce.

want the house

Why might both parties want the house in a divorce?

One party may consider it an advantage to retain the former matrimonial home, due to the convenience of remaining in the same property, providing stability for children, avoiding the costs associated with purchasing a new property and moving, and the sentimental connection. Conversely, the other party may feel disadvantaged due to these factors.

Another consideration that often creates contention over who retains the property, is the fear that the other party may gain financial advantage by retaining the property and selling it later for a higher value.

Case Studies for when both parties want the house in a divorce

Farnham

In Farnham [2022] FedCFamC2F 83, the parties had signed a Heads of Agreement, stating that, among other things, the former matrimonial home was to be sold. When given the contract of sale to sign, the husband did not comply with the Heads of Agreement and refused to sell the property to the buyer for a price higher than the expected market value at the time.

The Federal Circuit and Family Court of Australia held that the Heads of Agreement was not made in accordance with section 90G of the Family Law Act 1975 (Cth) and consequently the Heads of Agreement was not binding.

During proceedings, both parties sought to keep the former matrimonial home, valued at $450,000, rather than it being sold. The wife intended to make improvements on the property and the husband wanted to retain the property for farming purposes. The Court held that neither party was in a financial position to buy the other parties share nor was there sufficient equity in the property, in order to refinance, allowing one party to buy the others share. Consequently, the Court determined that the property was to be sold.

Stay & Stay

In Stay_v_Stay_1997_FLC_92-751, the Full Court of the Family Court of Australia at Brisbane ordered that the property be auctioned, and the husband or wife be at liberty to bid at such auction and should either the husband or wife be the successful bidder, the property be transferred into their name.

Rogers & Rogers

In the marriage of Rogers_and_Rogers_1980_FLC_90-874, the wife appealed and the husband cross appeal the initial orders made, whereby the wife was to pay the husband one-quarter of the net value of the former matrimonial home and the husband was to transfer his interest as joint tenant to the wife.

The parties received various valuations for the former matrimonial home that asserted a variety of contradictory values. The primary consideration in this appeal was that the initial Judge had not resolved what the value of the property was.

Consequently, it was ordered that the property be sold by public auction and each party should have the right to bid at the auction. The Judge noted that such course would no doubt involve the parties incurring some expense (e.g. stamp duty), however, it seemed to be the best and most practical way of resolving the matter without undue delay given both parties wanted to retain the property.

What have we learned – when both parties want the house in a divorce

If both parties want to retain the former matrimonial home and cannot reach an agreement as to how the asset is dealt with, the Court is most likely to make an order that the property be sold by auction and that either party be at liberty to bid at the auction.

By ordering sale of the property, both parties can have the option to retain the property if they wish and bid the price that they are willing to pay for it. This may involve the party seeking to retain the property paying a premium for the property, over and above the valuation price, which will in turn increase the cash payment that is required to be made to the other party.

If you are unsure as to your options regarding a property settlement, or your ex-partner has made it clear that they too wish to retain a specific asset, we strongly recommend you seek legal advice early on to understand your rights.

Contact us today to book a reduced rate initial consultation with one of our experienced family lawyers to discuss your individual circumstances, and we will guide a pathway for you to have the best chance of success at retaining the assets you desire.

**This Article was written by Harriet Whipp and edited by Courtney Barton.

 

 

Property, Protecting assets

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