It’s important to know about property interests in property settlement family law. Property settlement is a legal process that enables divorcing or separating couples to divide their finances, assets, and liabilities. Indeed, it is stressful for couples to divide everything they own in their relationship, especially if they are in dispute.
Moreover, some couples have bigger finances and assets to divide which may make their legal matters more complex. Hence, it’s important to know the relevant laws that relate to property settlement. The Family Law Act 1975 also sets out laws and regulations that deal with property interests in property settlement family law procedures. Read on to find out more about these sections.
What Are Property Interests?
Property interests are a basic right that allows a person to enforce their right over a property. However, it’s important to note that there are different types of property interests. Moreover, the type of property interest will affect how a person can buy the property or claim property (during property interests in property settlement family law proceedings).
1. Proprietary Interest
Proprietary interest is a type of right that allows a person to own one’s property. This could include a person’s possessions and ownership rights such as tangible or intangible rights. It’s also important to know that there are two main categories of property interests. These are:
- Real Property: This refers to the ownership of land, usually a house or an apartment.
- Personal Property: This refers to anything else which is not land which includes furniture, clothes, and intellectual property such as copyrights and trademarks.
2. Legal Interest
Legal interest is a type of interest that allows a person to have a legally enforceable right to own or utilise a property. Basically, this allows people to either own, sell, or transfer a property. However, people with a legal interest in a property should first register it with the government for its enforceability.
3. Equitable Interest
A court may establish an equitable interest on behalf of a person. This type of interest arises when there is a failure to meet legal requirements but enough intention to create one on behalf of both parties. If this is the case, people may take legal action over a property with equitable interest.
Section 78: Declaration of Interests in Property
According to Section 78 of the Family Law Act, courts may declare title or rights that a party has in respect of the property. If a court makes such a declaration, it may make orders that may give effect to it. This includes orders such as sale or partition and interim or permanent orders as to possession.
Section 79: Alteration of Property Interests in Property Settlement Family Law
According to Section 79, courts may conduct the alteration of property interests during property settlement proceedings. These orders will:
- Alter the interests of the parties to the marriage in the property
- Alter the interests of the bankruptcy trustee in the vested bankruptcy trustee. This applies if a party in the property settlement proceedings is bankrupt. A bankruptcy trustee collects payments and monitors the debtor’s obligations.
- Order for a settlement of property in substitution for any interests in the property
- Order either both of the parties or the bankruptcy trustee to conduct the settlement or transfer of property for the benefit of either both parties or the child of the marriage.
If a party to the proceedings passes away, courts may still enforce these orders on behalf of the deceased party. The court may also adjourn property interests in property settlement family law proceedings if the parties are:
- Involved in ongoing, closed, or concurrent divorce or marriage proceedings
- Divorced under the law of an overseas country where Australian law recognises the divorce
- Parties to an annulled marriage under the law of an overseas country where Australian law recognises the annulment
- Granted a legal separation under the law of an overseas country where Australian law recognises the legal separation.
These instances must have terms and conditions that the court considers that will enable parties to consider the effects of an order under this section on their children. However, this will not limit court powers in adjourning such proceedings.
What happens if the period for which a court has adjourned property settlement proceedings and instances above has not expired? Section 79 mentions that a party involved in the proceedings may apply to the court to continue the proceedings.
Property Interests in Property Settlement Family Law: Court Considerations
Section 79 (2) also mentions that courts will not make a property settlement unless it is just and equitable to make the order. When making property settlement orders, a court will consider:
- Financial contributions made on behalf of a party or the child of the marriage. An example of a financial contribution is the acquisition, conservation, or improvement of the property
- Contributions made on behalf of a party or the child of the marriage. Non-financial contributions still apply to the acquisition, conservation, or improvement of the property
- Contributions made for the welfare of the family including any contribution made in the capacity of a homemaker or parent
- Effects of any proposed order upon the earning capacity of either party
- Each party’s age and state of health
- The income and earning potential of each party
- Whether a party has care and control over a child under 18
- Commitments of each party to maintain themselves, another person, or a child
- Responsibilities of either party to support any other person
- The eligibility of any person for a pension, allowance, or benefits
- A reasonable standard of living where parties have separated or divorced
- Whether a party paying spousal maintenance will help the receiving party educate or train themselves or to establish a business to obtain adequate income.
- The duration of the marriage and if it has affected the earning capacity of a lower-earning party
- The need to protect a party that wishes to continue their role as a parent
- Whether either party is cohabiting with another person and the financial circumstances relating to the cohabitation
- Any child support that a party provided or is possibly liable to provide in the future
- Any binding financial agreements
- Orders that may affect a party or the child
Changes in Financial Circumstances
Section 79 (5) states that courts may still adjourn proceedings if there are significant changes to either party’s financial circumstances. Courts may also adjourn property interests in property settlement family law proceedings if it is reasonable to adjourn proceedings having regard to time and when the changes will happen. Courts may adjourn proceedings in favour of:
- Parties to the marriage
- The vested bankruptcy property in relation to a bankrupt party
Either party or a bankruptcy trustee may also request to adjourn the proceedings. They may only do this before the expiration period of the determination of applications for the proceedings.
Courts may also make interim orders or any other necessary orders before proposing the adjournment of property interests in property settlement family law proceedings. Courts may consider significant changes in the financial circumstances of either party of the proceedings if a party:
- Contributes to a superannuation fund or scheme or participates in any scheme or arrangement that is in the nature of a pension
- Has entitlements to the property as the result of the trustee of a discretionary trust exercising the ability to distribute trust property in his or her favour
What if a Party to the Proceedings Passes Away?
Section 79 (8) outlines the possibility of a deceased party to a property settlement proceeding. What happens if this is the case? Proceedings may still continue or the deceased’s legal representative may make provisions if the court views that:
- They would have made an order with respect to property if the deceased party had not passed away
- It is still appropriate to make an order with respect to the property
- It is still appropriate to make an order with respect to any of the property of the parties or any of the vested bankruptcy property. Courts may still enforce orders on behalf of or against the estate of the deceased party.
Parties Attending Conferences
The Federal Circuit and Family Court of Australia or any family court of a state shall not make an order under property interests in property settlement family law proceedings unless:
- Parties have attended a conference with the Chief Executive Officer or a Senior Registrar or Registrar of the court or any other family court of a state
- The court is satisfied that they need to urgently make the order or make the order notwithstanding the parties have not attended under any other special circumstances
- The court decided that it is not practical to require parties to attend a conference
The following people can act as a party to the proceedings:
- Creditors (people to whom debtors owe money to). However Section 79(10)(a) mentions that creditors cannot act as a party to the proceedings if the party is bankrupt to the extent in which the debt is a provable debt. Creditors may not also act as a party to the proceedings if the party is a debtor under a personal insolvency agreement.
- People who are in a de facto relationship with a party to the marriage
- People who could apply or has an application pending for an order under Section 90SM or a declaration under Section 90SL. Section 90SM outlines the alteration of property interests in property settlement family law proceedings for de facto couples. On the other hand, section 90SM outlines the declaration of interests in property.
- Any person who is eligible to apply for an order under Section 90SM or a declaration under 90SL
- People who are a party to a financial agreement
- Any other person where making the order will affect his/her interests
Bankruptcy Trustees
According to Section 79(11), courts must let a bankruptcy trustee act as a party to the proceedings if:
- An application is made for an order under Section 79 between parties
- A party to the marriage was a bankrupt
- A party was bankrupt after the application was but before it is finally determined
- The bankrupt trustee applies to the court in order to be part of the proceedings
- The court is satisfied that the making of the order will affect the creditor’s interests
A bankrupt party is not entitled to submit a representation to the court in reference to any vested bankruptcy property in relation to the bankrupt party. This is only true if a bankruptcy trustee is a party to property interests in property settlement family law proceedings and unless there is a leave of court.
However, courts will only grant leave if they are satisfied that there are exceptional circumstances.
On the other hand, according to Section 79 (14), courts must let a trustee act as a party to the proceedings if:
- An application is made for an order under Section 79 between parties
- If the debtor party was a debtor subject to a personal insolvency agreement
- A party becomes a debtor subject to a personal insolvency agreement after the application was but before it is finally determined
- The trustee of the agreement applies to the court in order to be part of the proceedings
- The court is satisfied that the making of the order will affect the debtor party’s interests
The party to the marriage who is the debtor subject to the agreement is not permitted to submit any evidence to the court on any property subject to the agreement. This is only true if the trustee of a personal insolvency agreement is a party to property interests in property settlement family law proceedings, except with a leave of court.
However, just like the instances of bankruptcy trustees, courts will only grant leave if they are satisfied that there are exceptional circumstances. For the purposes of 79(11) and (14) courts will only determine an application for an order under Section 79 when:
- The application is withdrawn or dismissed
- An order other than an interim order is made as a result of the application
Importance of Seeking Legal Advice
It’s important for parties going through property interests in property settlement family law proceedings to understand their obligations and other significant circumstances. That’s why JB Solicitors has drafted this article to outline the necessary laws and regulations that relate to property settlement.
Our lawyers are also ready to provide any legal advice should parties find themselves in a dispute regarding property settlement procedures.
Message us today for more information about property interests in property settlement family law.
