There are often many uncertainties post separation in Family Law, especially when it comes to payment of a joint debt. There is often confusion regarding the responsibility to continue payments such as the mortgage and rates, especially when one party has vacated the marital home.
Although there is often an expectation by the paying party that they may be able to recall this money upon a property settlement, this is not necessarily the case.
Mortgage Payments
Mortgage payments are the responsibility of the person who is named on the mortgage to ensure the mortgage payments are up to date. If both parties’ names are on the mortgage, it is both parties’ responsibility to ensure the mortgage is paid, regardless of who resides in the property.
Ceasing payments or falling behind may result in a negative impact on the parties’ credit ratings.
If either party are unable to meet the mortgage repayments, generally the property will need to be sold or for the parties to engage with their mortgage lender regarding other options, such as interest only payments.
If the party remaining in the property is unable to meet the mortgage repayments, they may be able to apply for spousal maintenance to assist this and other payments.
The Courts View
Although a party who continues to make financial contributions post separation may request a dollar-for-dollar recognition what they have contributed, the Court does not usually support this view.
When determining a property settlement, the Court will take a holistic view of the matter, including contributions before, during and after the relationship and the length of the relationship. The payments by a non-occupying party will often be seen as a benefit to the occupying party as they continue to have the use of the marital property without having to pay rent.
However, depending on facts of the case, these financial contributions may be offset by any parenting and domestic duties completed by the occupying party.
If the party who normally meets the mortgage payments fails to continue to do so without reasonable excuse, the Court may attribute that liability solely to that party.
Moving forward
There are several ways to address the uncertainty of future mortgage payments, such as one party buying out the other’s share of the property or selling the matrimonial home.
Regardless of how the parties proceed, it is crucial that any property settlement is documented in writing and in the correct format, whether it be by Consent Orders or a binding Financial Agreement.
If you have separated from your partner and would like advice regarding your parenting or property matter, please contact our firm to make an appointment with one of our family lawyers on (02) 4944 3322.
