In Australia, selling marital assets, such as the family home or other jointly owned property, before a property settlement is finalised can be legally complex and requires careful consideration of the Family Law Act 1975 (Cth). Whether you are looking to sell an asset to access cash, simplify the property pool, or resolve financial tensions, it’s essential to understand the legal landscape and the potential implications of such a sale.
Legal Framework for Selling Property During Separation
The Family Law Act governs property settlements following separation and divorce. Under the Act, the property pool—including assets, liabilities, and financial resources—must be fairly divided between both parties. The law requires full and frank disclosure of all assets and liabilities by both parties, including the market value of any property or assets. This disclosure is critical because it ensures the court or the parties negotiating a settlement can accurately assess the property pool and arrive at a just and equitable division of assets.
Can You Sell Assets Before the Divorce Settlement?
Yes, you can sell assets during separation, but there are important factors to consider before proceeding:
Consent of Both Parties: If the asset is jointly owned, both parties must agree to the sale. Without mutual consent, selling the property can become complicated. If your ex refuses to sell the property, you may need to seek a court order to force the sale.
Disclosure Obligations: Any sale of property during separation must be fully disclosed to the other party and the court, especially if it could affect the final property settlement. Failure to disclose a sale or disposal of assets can lead to serious consequences, including reopening the settlement or the court awarding penalties for non-disclosure.
Impact on the Property Pool: Selling assets before the settlement could affect the overall asset pool, as any proceeds from the sale would need to be factored into the settlement. Additionally, selling key assets such as the family home might impact the financial stability of both parties, which could influence the court’s decision on how to divide the remaining assets.
Court Intervention: In situations where one party refuses to sell the property, the other party can apply to the Family Court for an order to sell. The court will generally make this order if the sale is necessary to achieve a just and equitable property settlement or if one party cannot afford to refinance the property on their own.
Case Example: Property Sale During Separation
In Waters v Jurek [2010] FamCA 432, the husband and wife owned a family home, and after separation, the husband refused to sell the property. The wife applied to the Family Court for an order to force the sale, arguing that she needed the proceeds to settle other debts and maintain her financial stability. The court ordered the sale, recognising that the husband’s refusal was delaying a fair settlement. The proceeds were then divided between the parties as part of the final settlement, illustrating the court’s power to intervene when one party obstructs the sale​.
What Are the Options if Your Ex-Partner Refuses to Sell a Jointly Owned Property?
If your ex-partner is refusing to sell a jointly owned asset, such as the family home, there are several options available to you:
Option 1: Determine Whether Selling the Asset is Necessary
In some cases, selling the property may not be essential. For example, if your ex-partner wants to keep the family home, they may be able to buy you out by refinancing the mortgage into their sole name and compensating you for your share of the property’s value. This solution may be appropriate if one party wishes to remain in the home, particularly if children are involved, and the home provides stability.
Option 2: Agree to Sell the Property at a Later Date
If selling the asset immediately would cause undue hardship or disruption (such as if children are still in school or if the housing market is not favorable), you may be able to agree on a delayed sale. For instance, you could agree that the home will be sold once the children have finished school or at a specific future date, with both parties benefiting from any appreciation in the property’s value.
Option 3: Family Law Mediation
Mediation is a valuable tool to resolve disputes over selling property. In family law mediation, a neutral mediator can help both parties negotiate a settlement, including whether to sell the property, refinance, or make other arrangements. Mediation often leads to a quicker and less expensive resolution than going to court, and it allows both parties to have a say in the outcome.
Option 4: Apply to the Court for a Sale Order
If your ex-partner still refuses to cooperate, you can apply to the Family Court for an order to sell the property. The court will typically make this order if:
- The sale is necessary to achieve a just and equitable property settlement.
- One party cannot refinance the property’s mortgage in their sole name.
- Selling the property does not significantly affect either party’s ability to earn an income.
- One party is in breach of a previous court order (e.g., failing to make mortgage payments).
Once the court orders the sale, the property will be independently valued, and a real estate agent will be appointed to sell it. The court’s order will also set a timeframe for the sale, ensuring that the process moves forward promptly.
Case Example: Sale of Property Ordered by the Court
In Black v Black [2008] FamCA 7, the court was asked to intervene when the ex-wife refused to sell the family home despite an agreement that the property would be sold. The court ordered the sale, stipulating that the house be independently valued and sold by a real estate agent. The proceeds were then divided between the parties according to the court’s assessment of their contributions and future needs, demonstrating the court’s power to force a sale when one party is obstructive​.
Can You Sell Property Without Your Ex’s Consent?
The short answer is no, not without legal intervention. If a property is jointly owned, both parties need to agree on the sale. If your ex refuses to sign the necessary transfer documents or cooperate with the sale process, you cannot unilaterally sell the property. However, as outlined, you can seek a court order to force the sale.
The court will usually grant such an order if it is necessary to divide the property pool fairly or if the refusal to sell is hindering a just settlement. Once the court orders the sale, it effectively overrides the need for the non-cooperative party’s consent.
The Risks of Selling Assets Without a Court Order
Selling assets without court approval or your ex’s consent can result in significant legal and financial consequences. If you sell a jointly owned asset without your ex-partner’s permission, they can apply to the court to have the sale set aside or have the proceeds frozen. Additionally, non-disclosure or unauthorized sale of assets can lead to penalties, including fines, costs orders, or adjustments to the final settlement.
In Kennon v Spry [2008] HCA 56, the husband transferred assets to a trust in an attempt to exclude them from the property settlement. The High Court ruled that these actions were intended to defeat the wife’s claim, and the court included the assets in the settlement. This case highlights the risks of trying to sell or dispose of assets without proper disclosure or legal approval​.
Conclusion: Navigating Asset Sales During Separation
Selling assets during separation in Australia can be a viable option, but it requires careful navigation of legal requirements under the Family Law Act. If both parties agree to the sale, it can simplify the property settlement process. However, if one party refuses, legal intervention may be necessary to force the sale through the Family Court.
The best course of action is to seek legal advice before selling any assets during separation. A family lawyer can help you understand your rights, negotiate with your ex-partner, and ensure that the sale of any property is conducted lawfully and in a way that protects your interests.
