The Costs of Delay – What a Change in the Property Market Can Mean to your Family Law Matter
The property market has cooled of late. Or has it? We debate the shifts as a national past time. If you own property, you will likely have your own take on it and know your market better than the local agent. So, in saying that, what would a decline or increase in the property market mean for your family law matter?
Well, it can depend. But the most obvious consequence is that if the property market declines, then so does the value of your asset pool that needs to be divided.
Let’s think about the economic consequences of this. If you need to sell real estate as part of your family law property settlement, then the more the market declines, the less money that is going to end up in your pocket. If your partner is going to be keeping some real estate and ‘buying you out’ then a lower valued piece of real estate, again, means less money in your pocket. This is because the value of the asset pool is determined as at the date of the agreement, not the date of separation.
Let’s talk numbers! Let’s say there is an agreement to ‘go halves’. You and your partner value your asset pool at $1,000,000, $800,000 of which is made up of real estate which your partner is keeping and $200,000 is made up of other assets that you are keeping. To ‘go halves’ you need $300,000 from your former partner so that you can walk away with $500,000 from the asset pool. BUT something comes up, formalising the agreement stalls, or you are concerned about spending money on getting a lawyer to draft the documents and you and your partner don’t get around to doing something about this agreement for another 3 months. In those 3 months, the property market has declined and all of a sudden, the asset pool is only worth $800,000, $600,000 of which is made up of real estate and $200,000 of which is made up in the other assets. NOW, you only need to be paid $200,000 to walk away with halves. Your delay just cost $100,000 and your partner gets to retain the property.
We get it, legal fees are a grudge purchase. But, in our little case study above, we have demonstrated how acting sooner can save you a significant sum of money. By the same token, it may be in your interest to hold off the sale of a property or the signing of an agreement and what is needed is an understanding your rights and obligations under the Family Law Act, how an agreement should be structured, and those decisions can be better planned for.
Our excellent and experienced team has availability to see you as soon as possible and can usually see you within a day or so of booking. You can book a free discovery call here or contact us at the office on (02) 8379 1835.
We look forward to helping you.
Author: Kalisha Martin, Senior Lawyer at Lagom Family Law
** The information contained in this blog is general and does not constitute legal advice on your particular maner. You should consult a lawyer specialising in family law for independent legal advice regarding your particular circumstances **
Lagom is Swedish and means not too little, not too much, just right. This is our philosophy of practice as we aim to provide tailored advice specific for your individual needs - that’s just right for you!
Lagom Family Law is a boutique legal practice lead by Principal Lichee Hogland who strives to achieve the best possible outcome for her clients whilst being approachable and respectful.