Can a de facto take half house after a breakup? When a de facto couple in Australia who co-owns a house goes through a breakup, the fate of their shared property becomes a significant concern. This article delves into the complexities of property division post-separation, focusing on legal frameworks, financial contributions, and mortgage responsibilities.
Legal Framework of De Facto Property Settlement After Breakup
In Australia, when a couple buys property together, they enter into either a joint tenancy or a tenancy in a common agreement. These have distinct rules affecting how the property is divided upon separation.
Joint Tenancy
A joint tenancy means equal property ownership, irrespective of individual contributions to the mortgage.
The surviving partner inherits their share and any associated debts if one de facto partner dies. This arrangement views the couple as a single mortgagee.
🔑 Key Takeaway: Joint tenancy signifies equal rights to the property, regardless of individual financial contributions.
Tenancy in Common
Tenancy in common allows for unequal ownership shares, reflecting each partner’s financial contribution.
Each partner’s share can be sold independently, and in the event of death, their share doesn’t automatically transfer to the surviving partner but is handled as per their will.
Mortgages under this scheme are usually a shared responsibility.
🔑 Key Takeaway: Tenancy in common allows for flexible ownership based on financial input, with each partner having a distinct share.
De Facto Property Settlement Rights and Factors
The division of property in Australia for those in a de facto relationship does not automatically entitle one partner to half of the house. The Family Law Act of 1975 guides the division process, considering each partner’s financial and non-financial contributions, relationship length, children, age, health, and earning abilities.
A partner may be entitled to half the house if they can demonstrate that their contributions equate to 50% of the house’s value.
Factors like de facto relationship duration, children, and initial deposits are critical in this determination.
🔑 Key Takeaway: Property division is not a straightforward split but considers various contributions and personal circumstances.
De Facto Mortgage Responsibilities Post-Breakup
Post-separation, both partners remain liable for the mortgage. Options include:
- Selling the property.
- Continuing to pay off the mortgage jointly.
- Buying out the other’s share.
- Transferring the mortgage.
Selling the Property
Selling and splitting proceeds may require discharging the mortgage.
If the property’s value has increased, profits are shared; if not, other assets might be used to cover the mortgage.
🔑 Key Takeaway: Selling the property can be a clean break but involves discharging the mortgage and possibly using other assets.
Continuing Joint Ownership
Couples on amicable terms may continue owning the property jointly, treating it as an investment.
However, if one partner fails to pay their mortgage share, the other must cover it.
🔑 Key Takeaway: Joint ownership post-breakup requires clear agreements and readiness to cover potential payment shortfalls.
Buying Out or Transferring Shares
One partner can buy out the other’s share, necessitating refinancing the mortgage.
Alternatively, transferring the property share to one partner can offer capital gains tax relief, though future sales may incur taxes.
🔑 Key Takeaway: Refinancing is essential for buying out or transferring shares, with potential tax implications
Also read: De Facto Tax Benefits in Australia
Seek Professional Legal Advice
Given the complexity of these matters and their profound implications on individuals’ financial and personal lives, it is crucial to seek professional legal advice.
De facto lawyers can provide tailored guidance, ensuring that decisions are made with a comprehensive understanding of individual rights and obligations.
This approach not only aids in making informed decisions but also helps safeguard one’s interests during this often challenging transition.
Director of Melbourne Family Lawyers, Hayder manages the practice and oversees the running of all of the files in the practice. Hayder has an astute eye for case strategy and running particularly complex matters in the family law system.
7 thoughts on “I Bought a House With My Girlfriend in Australia and Now We Have Broken up”
Hello Hayder,l have a problem brought a house with my partner,We have separated but he doesn’t want to sell the house,but is willing to give me $30.000 from a caravan that is in his name,and wants to pay me money fortnightly for rent.And he will continue to pay the mortgage with is $118.000 by himself.plus the rates.And then after we pass the house will go to my 2 grandchildren as he has no relatives. I will still be on the house and land title.
Hi Yvonne, I recommend getting in touch with our office directly to receive detailed advice on your situation.
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Hi if a de facto relationship ends an it’s tenants in common half share does the remaining person have to sell if one has to go into. Nursing home to pay his costs with his share
If the property is owned as tenants in common, each party owns their respective share, so the person entering the nursing home would not be forced to sell their portion. However, their share of the property may need to be treated as an asset and potentially sold to cover the costs of nursing home fees, depending on their overall financial situation.
I own my house, my defacto has not contributed to paying for any of it nor does she pay for any utilities, rates, etc. she virtually lives in my house for free. If we broke up would she be entitled to any part of my house?
Hi Max,
If you have full ownership over the property and cover all costs relating to the house, then your de facto should not be entitled to any part of the property in the unfortunate event of a breakup.