Selling property after a separation.

Divorce and Family Law A separation or divorce can be one of the toughest things a person will face during their life. There is a lot to think about; where will you live, who gets what, who will the children and pets live with etc. Here are the things to keep in mind when selling a property after separation.
One thing that can be particularly time-consuming and difficult to deal with in the sale of a property. How you proceed with selling the property after separation will come down to the relationship itself, how the parties are coping with each other and what they each want to do with the property.  

There are two ways property is sold:

  1. Through agreement and negotiation of both owners, or 
  2. via court orders. 

As you can expect, if you are in agreement with respect to selling the property, it is a lot easier than proceeding with option and seeking court orders to sell it. 

Most people need to settle a property sale as soon as possible once they separate, as either one or both parties need to move out and find new accommodation. This is not easy to do if you are still paying a mortgageThere are many things to keep in mind, even if you have both agreed to sell the house. As we know in all relationships, each person has strengths and weaknesses and more often than not, there is one party who is better at handling matters like this and making quick decisions.  

During the sale of a house, there are a few very important things that need to happen for a seller:

  1. Both parties need to give instructions to their solicitor. When dealing with a separation matter, your solicitor is unable to negotiate or act on your instructions until the same instructions are received from both parties. Remember, as you are both owners of the selling property, you are both considered that solicitor’s clients.  
  2. Some of the things you may need to sign include a Discharge of Mortgage if you have any mortgages over the property, Transfer documents to allow the property to be legally transferred into your name at settlement, Client Documents which is the initially written questionnaire and accompanying documents your solicitor will give you.
  3. Both parties will need to agree with the figures. This is where it can get particularly tricky.Family Law Property settlement

Many separated couples struggle to agree on figures if a purchaser requests a reduction under a condition of the contract, most commonly the building and pest condition. Until both parties agree on the reduction, they are willing to give, no negotiations can be entered into with the buyer. 

Some people also struggle on the split of funds at settlement. Someone may have paid off more of the mortgage during the relationship, someone may have put a lump sum into it, someone may have paid for renovations, someone’s parents may have gifted them the deposit, and the possibilities go on and on. 

At the beginning of the matter, your solicitor will ask you if you have agreed on how the funds will be split at settlement. If you have not by that time, they will let you know you need to before settlement. When it comes close to a settlement, you will be given a statement showing how all adjustments (rates, water, mortgage discharges, reductions etc.) have been accounted for. They will detail cheques required to pay off their fees, any outstanding bills, any commission to your real estate agent, any payout figure to your bank. Most of the time there will be a lump sum left over – which you both, as the clients, need to instruct your solicitor on the agreed split of those monies.

If you are unable to provide agreed on instructions on the way this will be split; your solicitor will have no choice but to retain all the excess funds from the settlement in their trust account until you can agree. This is generally when the parties will be instructed to take the matter further to obtain a court order for the way these funds will be split.

Property SettlementShould parties not agree on the split of funds or one party refuses to give instructions or sign documents, your solicitor will then require that one party seeks independent representation in settlement of the contract or recommend you apply for orders to force the sale/detail the split of funds. Court orders (option 2 above) take time to be put in place, especially during the COVID-19 Pandemic. The courts are extremely busy, and it may take you many months to obtain a Judgment as to how the funds will be split at settlement.  

Court orders can also be sought at the very beginning of the matter if one party does not want to sell the property. Please note the time it will take to obtain a Judgment and the cost of seeking the orders from the court.  

As you can see, while it can be a very hard thing to deal with, especially when going through a separation, it is in everyone’s best interest to agree with selling the property and how the funds will be split, before you proceed to sell the property. 

Each separation is different, and each party needs to do what is right for themselves in that situation. However, if you do need to sell a property following a separation, please keep in mind the above pitfalls and potential traps you may encounter so you are prepared for what may come.  

Related articles What will happen to my pet after separation?Inheritance and Property Settlement During Divorce .

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