Vauling Property in family law matters
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Valuing Property in Family Law Matters
Do we need to value the property?
Separating couples can sometimes come to an agreement about what a property is worth without a formal Family Law valuation. In those cases, if the couple can agree on the value of the property, then that figure may be used for the purposes of negotiations and a formal valuation may not need to occur. Sometimes, couples may obtain several free real estate appraisals and use this as a rough estimate of the value of the property.
Couples may disagree on what the property is worth but agree that it needs to be sold. In those cases, a valuation may not need to occur, as the property will be sold shortly and whatever it sells for is whatever it is worth.
How is the property valued?
We often have cases where a separating couple disagree on the value of the property, but both are adamant that their valuation is correct. Sometimes this is based on a real estate appraisal, a bank valuation, council rates, or even a ‘gut feeling’ on what the property is worth.
For Family Law purposes, none of the above are sufficient ways of valuing a property. Real estate appraisals are often optimistic to try and win business, while bank valuations and council rates tend to be conservative to minimise their risk. A Family Law valuation is usually conducted by a trained property valuer. The property valuer will inspect the property, conduct research on similar and nearby properties, and provide a detailed written report with photographs and evidence on why they valued the property at a certain figure. Sometimes, a property valuation can include a ‘retrospective valuation’ – i.e. how much the property was worth at a certain point in time. This can be useful if the parties disagree about their contributions to the marital asset pool. Usually, it is recommended that the parties engage a single expert. This means that the parties agree on a valuer who will prepare one report for both parties to rely on, which can reduce disputes between the parties. If either party disagrees with the valuation, they can cross-examine the valuer if required.
Can I buy out my ex-partner?
One party (or both) will often wish to retain the house, particularly if there is a sentimental connection. In these cases, one party may wish to ‘buy out’ the other party’s interest in the property. This is often a good solution to reduce the costs of selling and repurchasing property, or to avoid moving children who are settled and stable in the home.
When looking to buy out a spouse, it is important that a party considers:
- Whether they can afford the rates and bills on their own;
- How they will obtain the funds required to buy the other party out, particularly in cases where there is a very small or no mortgage; and
- Whether they can refinance in their sole name – we advise speaking with a bank or mortgage broker to see if it is possible to refinance the mortgage in your name alone.
What if we both want to keep the house?
If both parties want to keep the house, it can often be difficult. If there are no court orders in place and no safety concerns, there is no way to force one party out of the house without initiating court proceedings. The Court can order that the house be sold or retained by one party, as well as ordering one party to leave and allowing one party sole occupancy and use of the property while the matter is being decided.
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