Tuesday, 25 September 2007

How to cut a deal: Qld

Currently there is one system of law covered property settlement for married couples who want a property settlement- under the Family Law Act, which is Commonwealth law and applies throughout Australia.

For de facto couples, different rules apply in each of Australia's eight States and Territories. Tonight I'll focus on Queensland.

Why formalise a deal?

There are some obvious reasons:
-certainty- the knowledge that the financial issues between you and your ex are at an end and you can move on with your life. There is nothing quite like acting for a client who has come to see you because they had an informal property settlement, thinking that it was all over, and their ex has applied to court asking for more.

- being able to borrow- Often banks will require a client when refinancing to formalise the deal- for obvious reasons- the bank also wants to ensure that its investment is secure and not put at risk.

- tax and stamp duty considerations- There can be exemptions or rollover releif for capital gains tax or stamp duty with formalising a deal which are not available with informal deals.


What's needed in Qld?

In Queensland, there are two methods, both of which are under Part 19 of the Property Law Act 1974. The first way is to have an order made. This can be consent, without the need to actually go to court. made by the Supreme, District or Magistrates Courts. The District and Magistrates Courts can exercise jurisdiction by consent, but usually their upper monetary jurisdiction is $250,000 and $40,000 respectively.

Given the price of houses, most property settlement orders will be made in the Supreme Court. The Supreme Court in Brisbane has a 24 hour turnaround for most consent orders.

The more common method is to enter into a separation agreement. Here are the technical requirements:
-A separation agreement is an agreement--

-made by de facto partners--
in contemplation of ending their de facto relationship; or
after their de facto relationship has ended; and
dealing with all or some of the de facto partners' financial matters.

It does not matter whether there are other parties to a separation agreement or a separation agreement deals with other matters.

At first blush, it seems that

any type of agreement can be a separation agreement. Whilst this is no doubt true, the important trick is to ensure that the separation agreement is a recognised agreement. This is because the Property Law Act prevents the court from making property settlement orders inconsistent with a recognised agreement.

What's required for a recognised agreement

The Property Law Act sets it out:

A recognised agreement of de facto partners is a cohabitation or separation agreement of the de facto partners that--

(a) is a written agreement; and
(b) is signed by the de facto partners and witnessed by a justice of the peace (qualified) or solicitor; and
(c) contains a statement of all significant property, financial resources and liabilities of each de facto partner when the de facto partner signs the agreement.
(2) Whether all significant property, financial resources and liabilities of a de facto partner are stated depends on whether the value of a property, financial resource or liability of the de facto partner that is not stated is significant given the total value of the de facto partner's stated property, financial resources and liabilities.

If you meet these technical requirements, then you comply.

Of course, anyone contemplating entering into a separation agreement (or consent order for that matter) should obtain independent legal advice from a solicitor of their choice, preferably a law society accredited family law specialist.

The last part of the requirement for a separation agreement states what should be obvious- each party should come to the negotiating table with clean hands, with nothing to hide. As I read in one recent court case, it is a case of
show and tell,
not
hide and seek.


Failure to make full and frank disclosure may lead to a finding that there has not been a valid separation agreement, meaning that the whole issue of property settlement is re-opened.

2 comments:

Bee said...

Very clear and informative. Thank you.

Anonymous said...

Thank you for this, I was very unclear what it is required even after I consulted a lawyer. You article was crystal clear. Signed finally today - thank you.