Dividing property during a divorce is rarely simple, and how it's handled depends heavily on your specific matrimonial property regime and personal circumstances. Here's a general overview of the options typically available.
Your Matrimonial Property Regime Matters First
Whether you're married in community of property, out of community of property with accrual, or out of community of property without accrual significantly affects how property is treated in a divorce. This is a legal question best answered by your divorce attorney based on your specific antenuptial contract, or lack of one, rather than assumed from general information.
In community of property generally means joint assets are split equally, regardless of whose name is on the title deed. Out of community of property, particularly without accrual, tends to keep assets more clearly separated, though the property's history, including who paid for what and when, can still factor into a settlement negotiation.
Selling and Splitting the Proceeds
One common approach is selling the family home and dividing the net proceeds according to the settlement agreement or court order. This is often the cleanest option when neither party wants to, or can afford to, keep the property alone, and it avoids ongoing joint financial ties once the divorce is finalized.
One Party Buying Out the Other
Alternatively, one spouse can buy out the other's share of the property, either through a cash payment or by refinancing the bond into their sole name. This requires the remaining spouse to qualify for the bond independently, which isn't always straightforward if the original bond application relied on both incomes.
It's worth having this conversation with a bond originator early in the process, since discovering you can't qualify to buy out your spouse after settlement terms have already been agreed can complicate an otherwise finalized arrangement.
The Joint Bond Complication
If the property has a joint bond, both parties remain legally liable for it until it's settled or refinanced into one name, regardless of what a divorce settlement agreement states privately between the parties. The bank isn't party to the divorce agreement and will continue to hold both names liable unless the bond itself is formally restructured.
This is one of the most commonly misunderstood aspects of divorce and property. A settlement agreement stating one party is "responsible" for the bond doesn't remove the other party's liability to the bank if that person defaults, unless the bond has been formally refinanced or the property sold and the original bond settled.
Timing the Sale Around the Divorce Process
Property is often dealt with as part of the broader settlement negotiation, and the timing of a sale can be arranged to coincide with when the divorce is finalized, or sometimes sooner if both parties agree and the court process allows for it. Coordinating closely with your attorney on timing avoids the property sale complicating the legal process, or vice versa.
Getting a Fair, Independent Valuation
Whether the plan is to sell or for one party to buy out the other, an independent, accurate valuation protects both parties from the property being under or overvalued during a naturally difficult negotiation. This is worth arranging through an agent with strong local market knowledge, separate from either party's personal interests in the outcome.
Frequently asked questions
Does the person who moves out lose their claim to the property? Not automatically. Moving out during divorce proceedings doesn't generally forfeit a legal claim to the property, though it's worth confirming your specific position with your attorney.
Who is responsible for bond repayments while the divorce is being finalized? This depends on the settlement negotiation or a court order, but until the bond is formally refinanced or the property sold, both parties named on the bond remain legally liable to the bank.
Can a property be sold before the divorce is finalized? In some cases, yes, if both parties agree and it's coordinated properly with the legal process, though this varies depending on individual circumstances and is worth confirming with your attorney.
How is the property valued for a divorce settlement? An independent market valuation is generally used to establish a fair current value, separate from what either party might personally believe the property is worth.
Navigating a Property Sale During Divorce?
Our agents approach these situations with discretion and professionalism and can provide an independent valuation and handle the sale process while you focus on the rest of the transition.
Get a free Comparative Market Assessment or speak to a Bass Property Group agent in confidence.
