10 Mar How can we agree on the value of our house in a Family Law property settlement?
In many Family Law property settlements, the value of the matrimonial home is often a contentious issue which arises.
The family home is the most precious asset which many Australians own. The current strength of the Sydney property market has resulted in significant growth in housing prices over recent years, as such the value of a family’s home may have grown significantly during the length of the relationship.
In addition, many home owners feel strong ties to the family home for non-financial reasons such as:
- The family memories which have been created in the home
- The home being a familiar and stable environment for the care of the children
- Any home improvements which were undertaken to suit owners’ needs
- The perceived sense of losing in the property settlement when a party exits the home
For these reasons separating parties often find it difficult to estimate what their home is worth.
To further complicate matters, both parties often have competing interests when it comes to the valuation of the home.
When parties separate, often one party will seek to retain the home in the property settlement. The retaining party may propose that the party leaving the home be “bought out” of the property. This “buy out” would increase if the agreed value of the home increases. As such party who seeks to retain the home can benefit from the home being attributed a lower value.
Due to these competing interests disputes often arise regarding what value should be attributed to the home. These disputes can cause delays to the settlement, increased costs and be the source of additional animosity between the parties.
How to Value the Family Home?
There are several ways to come to an agreed value of the home for a Family Law property settlement. Different methods will be appropriate in different circumstances and each have their benefits and downfalls.
1. Agree on the Value of the Property
It is open to both parties to come to an agreement as to the value of the home. This method is often the most efficient way of resolving the issue.
If parties are going to agree to a value of the property there are a few steps which should be taken before committing to an agreed value:
- Obtain legal advice:
Prior to coming to an agreement as to the value of the home both parties should receive independent legal advice regarding their Family Law property settlement in order to clearly understand their entitlements and the impact of the value of the property.
- Obtain real estate market appraisals:
Real estate agents will often provide free market appraisals to home owners who request them. We suggest that parties gather three market appraisals from local, reputable real estate agents to inform their estimate of the homes current value. Whilst market appraisals are as less accurate than a professional valuation, they do provide an indication of the market value of the property and can be gathered for free and without delay.
- Come to an agreed value of the property:
Both parties can now engage in discussions either directly or via their legal representatives as to what value should be attributed to the property.
2. Get the property professionally valued by a jointly appointed valuer:
If the parties cannot agree to a value for the property, they may seek the advice of a valuer. Obtaining a formal valuation can cost between $600- $2,000 and will require the valuer be provided some documents such as the title to the property, to attend the property and take photos.
If a party does not agree to a valuation occurring the Court can make Orders that an independent valuer be appointed and that a valuation be carried out.
Prior to obtaining a formal valuation the parties should both obtain independent legal advice. The parties should then ensure that the valuation is conducted in accordance with the following steps:
- Ensure the valuer is jointly appointed:
Jointly appointing a valuer indicates that both parties intend to agree on the valuation of the property once it is provided to them. Both parties would often share equally in the cost of the valuation. This will avoid the issue of one party arranging a professional valuation, only to have the other party dispute that value.
- Propose 3 valuers:
As the valuer is to be jointly appointed it is important that both parties are consulted as to who will conduct the valuation. Often the party who is requiring that the property be valued will have their lawyer propose 3 local professional valuers and allow the other party the opportunity to select one.
- Appoint the valuer in accordance with the Court rules:
it is important that any valuation that is conducted is done so in accordance with the Family Court or Federal Circuit Court rules, even if the parties have not yet commenced proceedings. This will allow the valuation to be admitted as evidence in the event that the matter does proceed to court. This will also ensure that there is no attempt by either party to interfere with the valuer providing an unbiased valuation of the property.
Once the valuer provides their valuation then the issues should be laid to rest and the parties can enter into negotiations regarding their Family Law property settlement.
3. Sell the property
If the parties cannot agree on a value for the property or a valuer then the property can be sold. Whilst this is the most accurate method of determining a property’s value, this is often a last resort as it is an outcome which may not benefit either party.
There are costs associated with the sale of a property such as sales commission, relocation costs and stamp duty on the next property purchased which will cause a reduction in the asset pool. If the parties cannot agree to a value of the property and will not agree to a sale the Court has the power to make an Order that the property be sold in order to determine its value.
Should you have questions relating to the value of your family home and your family Law Property settlement, please contact Solari and Stock Miranda 8525 2700 or click here to request an appointment with one of our experienced Family Law Team.