Safe As Houses
The economic instability caused by the Covid-19 global pandemic is starting to impact Australian home values, especially those in capital cities. To the relief of smashed avocado toast eaters saving for a home deposit, it is anticipated that property prices in Sydney may continue to fall.
But what happens when separating parties have already agreed on the sale of a property as part of a family law settlement?
Does the changing financial landscape provide scope for parties to overturn previous agreements?
These were the issues addressed in the recent Family Court decision of Huey & Huey [2020] FamCA 354 in which the husband and wife had entered into a Binding Financial Agreement setting out the way in which their property would be divided following their separation. The Agreement provided that the family home be sold and the proceeds of sale be distributed to the husband and wife in fixed amounts, and any surplus be divided equally. Pursuant to the agreement, the payment to the husband was to take priority over the payment to the wife.
The husband sought to set the Financial Agreement aside on a number of grounds, particularly on the basis that the Agreement was now unenforceable as the primary asset sought to be protected through the Agreement, that is, the home, had been "depleted".
The husband's argument, that the decline in the property's value meant that the Agreement ought be set aside, was rejected by Justice Rees. In her Judgment, Rees J noted that while the sale of the property would probably not yield a sufficient sum to satisfy the entirety of the both parties' entitlements, there would be enough to satisfy the payment to the husband in accordance with the terms of the Financial Agreement and there would therefore be no impediment to the terms of the Agreement being put into effect.
The fact that the property had decreased in value, and was not likely to achieve a sale price as high as had been originally anticipated by the parties, was not a reason to set aside the valid Binding Financial Agreement.
It is important that parties entering into a Financial Agreement or consent orders understand the terms of the agreement reached and the impact of a change in the value of any of the property to be divided between the parties, or to be retained by either party.
If you are in the midst of a separation, or you are considering a sale of a property as a result of a recent separation, consider contacting one of our specialists in family law at Pearson Emerson Family Lawyers, for advice.
