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Patrick H.
Patrick H., Lawyer
Category: Australia Law
Satisfied Customers: 5422
Experience:  Dip Law LPAB - Sydney based lawyer
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My partner and I are equal owners of a house in Melbourne,

Customer Question

My partner and I are equal owners of a house in Melbourne, which we are paying off together. He paid the deposit two years ago, and we share the mortgage payments equally. Now he wishes to end the relationship and either buy me out or sell the house. I don't want this to happen, but he insists. The total of our monthly mortgage repayments on our investment in the property currently stands at $20,000 each. My questions are; (A): If he buys me out, am I able to have my $20,000 investment in the mortgage refunded? And (B): Would I also be entitled to half of the paper profit our investment has accrued? And whose current property valuation would be acceptable; the Bank that financed the mortgage or several real estate agents' estimates? What would be different if the property has to be sold instead?
Submitted: 1 year ago.
Category: Australia Law
Expert:  Patrick H. replied 1 year ago.

Hello and thank you for your question.

It is not surprising your lawyer is somewhat uncertain because these are not matters that generally have simple answers and can involve a mix of common law and family law principles.

If you are a de facto couple and have been so for more than two years (or had a child together), and are now separating, then your situation will be governed by the Family Law Act in which case the law privides that you will each be entiteld to what is fair having regard to your respective contributions and then adjusting for any special considerations such as if either of you have the care of a child of the relationship, or have health problems that will impact the ability to support yourself. It is a very rough and ready type settlement and can be difficult to predict.

If you have not been in a defacto relationship for two years and do not have a child together, then your situation is governed by ordinary legal principles as to co-ownership. In that case if you are joint owners and do not have an agreement which deals with the situation where one party wants to sell and the other doesn't, then the party who wants to sell will generally be able to apply to the court to order the sale so that each party can receive their share of the property. So unless you think you can produce credible evidence that an agreement was in place that would prevent the sale of the property, you likely will be fighting a losing battle if you try to simply prevent the sale.

In terms of working out the price, you need to either negotiate it or apply to the court for a declaration about the price (based on whatever evidence you can submit, including expert valuations and such) or simply put the property to auction and see what the market concludes.

As to how you divide whatever you work out the property to be worth, there is no simple formula to apply to your situation where you have contributed uneven amounts at different times, but are otherwise equal owners. The court could take the view that the additional contributions of one should alter the interests of the parties to reflect their relative contributions to the mortgage. Alternately, the court may simply treat the party who has paid extra toward the mortgage/deposit as having effectively 'loaned' their money to the other owner to the extent required to balance the ownership in accordance with the parties share on the title, in which case each party would receive 50% and then adjust it by the amount of any 'loan' plus interest. Or the court could deal with it in a manner in between these two approaches. Usually the wisest course is to negotiate a figure somewhere in between these approaches, but the particular facts of your case may alter the approach the court takes.

I appreciate this isn't the clear cut answer you may have hoped for but it does reflect the law as it applies to your situation.



Expert:  Patrick H. replied 1 year ago.


I note it has been some time since I povided my answer to you, but you haven't rated my answer yet and am wondering if there is anything further I can do for you to ensure a positive rating.