A common feature of family law property settlements reached between separating spouse is the transfer of properties to the sole ownership of one of them. It might be the jointly owned home, or an investment property. The settlement may involve the payment of money on the transfer to the other spouse and the refinance of the mortgage secured against the property. In this article, Special Counsel Matthew Shepherd explains step by step how the process works in practice.

Conveyancing

Conveyancing in NSW South Wales is now electronic and online. Parties will normally use conveyancers or lawyers who are registered with PEXA – or similar systems. They often will use the same conveyancer or lawyer they used to buy the property. When our client’s request it, we at Ramsdens work with Dott and Crossitt Conveyancing.

Step 1 – Separation Agreement Between Separating Spouses

  1. Documentation of the settlement agreement. This is normally done via the parties entering into consent orders or a financial agreement. For the pros and cons of these options see our article here on the different types of separation agreements. The settlement agreement should provide a time period for the transfer and any payment. A properly documented settlement avoids payment of stamp duty on the transfer of real estate between the spouses. It also avoids the transfer being a disposal for capital gains tax purposes. When the person taking the property sells it in the future they will be liable for the capital gains tax calculated on the original purchase value. We always recommend obtaining individual taxation advice at the time to assess the relevant tax laws at that time.
  2. The person receiving the property should have already checked during negotiations of the settlement that they can afford to pay any agreed amount agreed to the other party and to discharge and refinance any existing mortgage against the property. Typically, this will be by them borrowing funds from a bank. Once the settlement is agreed and documented they need to ask the bank to progress the loan.

Step 2 – What Does the Conveyancer Do?

  1. The conveyancer for the person receiving the property will:
    • Set up a file in PEXA to do the transfer.
    • Apply for the waiver of stamp duty.

Step 3 – Navigating The Mortgage and Title of the Property

  1. Close to the date of the settlement, the conveyancer for the person receiving the property will:
    1. Request a discharge of any existing mortgages secured against the property. Both parties will need to join in this request to the old bank.
    2. The old bank will provide a payout amount they require to be paid before removing their mortgage.
  2. There will then be a settlement when the old mortgage will be paid out, any new mortgage for a new loan (needed to pay out the old loan or pay any required amount to the spouse not receiving the property) and for the transfer of the title. This usually all happens simultaneously.
  3. This will result in the title of the property being changed to show the receiving spouse as the registered owner and the registration of a new mortgage. The other spouse will have no further liability for the mortgage.

The complexity of coordinating these transactions can vary depending on various factors including:

  • Whether the spouse receiving the property is refinancing with the old bank or a new bank.
  • The efficiency of the banks.
  • Whether one of the spouses lodged a caveat earlier on the title.

Whether the family law settlement links other aspects of the settlement to the transfer of the property. For example, the other spouse may be receiving another property and refinancing the mortgage on it. Neither spouse may be able to refinance the loan on the property they are receiving without the other mortgage on the property they are not receiving being discharged. In this case, the transfer and refinance of both properties must happen simultaneously.

How We Can Assist with Transferring Real Estate Between Separating Spouses

Transferring jointly owned or investment property between separating couples can be a complex process. It is crucial to have a documented settlement agreement, usually achieved through consent orders of a financial agreement. Our team of family lawyers is well-versed in these matters and can help you determine the most suitable type of separation agreement for your situation, ensuring that your best interests are protected. Properly documenting your agreement can also help you to avoid paying stamp duty on the transfer of real estate between you and your partner.

In our Sydney office, we have the privilege of sharing space with Dott and Crossitt Conveyancing, who have extensive experience in assisting on such matters.

If you would like to speak with one of our experienced family lawyers about navigating the transfer of real estate during separation, please do not hesitate to contact us. We will work with you to ensure you receive the best possible advice tailored to your specific needs.

Written by Reece Ramsden

Posted in: Latest News

October 11 2024