De facto property settlement can be as complex as a marriage break up
You commit to a relationship with your partner and move in together. You earn more, so you pay for most of your home. You own the furniture, you share your car and you meet the bulk of household costs.
Two years go by and the relationship has cooled. It’s over, and you want out. So how does a de facto property settlement work?
Do you have a right to keep all the shared assets you’ve bought?
Because you’ve brought most of the material goods to the relationship, you believe you should simply be able to take these with you. You paid three-quarters of the cost of the investment property you purchased together, so surely it’s yours. After all, it’s not like you were married and need a divorce or property settlement.
Not so. After two years of living together in a genuine domestic relationship, you are considered under family law to be a de facto couple. Under Section 4AA of the Family Law Act 1975, partners in a de facto relationship have the same rights and obligations as married couples.
Is a de facto property settlement determined the same way as a divorce property settlement?
When a de facto partnership ends, assets can be split in a similar manner to those of a married couple. (See De facto Relationships, Family Court of Australia.)
If there is a joint investment or joint ownership of a home, the couple will need to agree on how to divide the property. One might buy the other out, or they may sell the investment and divide the proceeds, either according to their contribution or to the ratio the partners agree upon.
If they don’t reach an agreement it might end up in court, where joint assets like property can be pooled together and divided according to future needs, rather than in proportion to each partner’s contribution.
Range of factors taken into account in de facto property settlement
Like a property settlement at the end of a marriage, a de facto property settlement can take years to finalise if the parties are not in agreement. In both cases, a judge will look at the asset pool, how much each partner contributed, and the future needs of each partner in arriving at a just and equitable way to split the assets.
It can become complicated when one partner insists they were not de factos, but just friends. This is why it is wise to keep detailed financial records during the relationship, so you can verify that you were indeed de factos.
Understanding your legal rights in a de facto relationship breakdown
With or without children, a de facto separation can be just as complex and heartrending as a marriage breakdown.
With one in six people in Australia living in a de facto relationship, it’s important to know your legal rights and obligations, which are governed by the same laws as those applying to married couples.
For more information, please see our earlier articles Is a de facto relationship the same as a marriage? and “I want half” – common myth that assets split equally in family law property settlement.