Often couples separate after buying a home (and getting a mortgage) together. When this occurs difficult questions usually arise up about who is going to stay in the home, whether the home is going to be sold or kept by one of the parties, and who is going to pay the mortgage.
If you and your ex-partner both have your names on the home loan, you will most likely be jointly and severally liable for the loan. This means that you will both be on the hook for the total amount of the debt. It will also likely mean that both you and your ex-partner’s credit ratings will be affected if the mortgage repayments are not made.
The effect of this is that you may need to continue to meet the mortgage repayments for the home, even if you are not living there, to avoid your credit rating being affected and to avoid the bank potentially foreclosing on the property.
There are however some things that can be done to address this situation.
You can in certain circumstances obtain an order from the Family Court for your ex-partner to pay the mortgage if he or she is refusing to pay (or pay the full amount of the mortgage) while remaining in the home.
This is because as a general rule, it is reasonable to expect that if someone remains living in the home and they have the ability to pay the mortgage, that they should make the mortgage repayments without the assistance of the person who is no longer living in the property. This should continue until the home is sold or transferred to one of the parties.
You can also contact your lender and ask if they are prepared to put a hold on the mortgage repayments or accept reduced repayments (such as interest only repayments) while you and your ex attempt to resolve your property matters.
It is also a good idea to contact your bank and ensure that any redraw facility connected to the mortgage is cancelled or altered to require joint signatures. This will prevent your ex from increasing the size of the mortgage following separation.
If you do continue to pay the mortgage after moving out, this can be taken into account as a post-separation financial contribution in reaching a property settlement dividing your property.
If you and your ex are able to reach an agreement about dividing your property, you should obtain Family Court orders (or alternatively, a Binding Financial Agreement) to formalise the agreement. This will protect you against any future debts your ex may incur or any claim to your property your ex may otherwise seek in the future.
If the home is to be transferred to you or your ex and the accompanying mortgage refinanced, you should obtain Family Court Orders or a Binding Financial Agreement to avoid paying the full rate of duty on the transfer, which will likely be thousands of dollars.
If you, a friend or family member are going through a separation and are thinking about leaving the home or asking your ex to leave the home, we highly recommend seeking legal advice before progressing your case. Please do not hesitate to contact Lynn & Brown Lawyers for expert advice and assistance.
About the author:
Robert Pearson is an Associate who was admitted as a barrister and solicitor of the Supreme Court of Western Australia in 2013 and is an experienced lawyer specialising in Family Law matters.