The simple guide to de facto relationships and property

Rates and Fees verified correct on December 6th, 2016

Defacto relationships and property

Living with your partner in a de facto relationship can have huge implications for property ownership and what happens to your home if you split.

In days gone by, couples didn’t live together until they had tied the knot. But times have obviously changed in recent decades, and living together in a de facto relationship is now the norm for many Australian couples.

However, even though you and your partner may not be married, your relationship status has some very important consequences in the eyes of the law. Read on to find out what those consequences are and how they affect you, your finances and the ownership of your property.

Does the law recognise de facto relationships?

New laws concerning the division of property for people in de facto relationships were introduced to Australia in 2009. Under these new laws, separating de facto couples are now treated the same as married couples in terms of the division of property and the payment of spouse maintenance.

To be classified as being in a de facto relationship, two people who are not married or related by family must be living together on a “genuine domestic basis”. The two people can be of opposite sexes or of the same sex, and the circumstances of their relationship will be used to determine whether or not they are in a de facto relationship. These circumstances include:

  • The length of the relationship
  • The nature and extent of your common residence
  • Whether a sexual relationship exists
  • The ownership of your property
  • The care and support of children
  • The degree of financial dependence or interdependence between both people
  • The reputation and public aspects of your relationship

These new laws are important because people in de facto relationships have the same financial responsibilities to their partners as married couples do.

What happens to property when a de facto relationship breaks down?

When de facto couples separate, they can obtain property settlements on the same principles that apply to separating married couples under the Family Law Act 1975. Before doing this, however, you and your former partner should try to reach an agreement about all financial and property issues. There are family dispute resolution systems in place to help you and your partner reach an agreement without going to court, and these avenues should be explored before going any further.

You have a time limit of two years from the date the relationship ends to make a property claim against a former de facto partner with the Family Court, and you will need to prove that you and your partner lived together for two or more years. However, in certain circumstances it is still possible to make a claim if you’ve lived together for less than two years, for example if you and your former partner have a child together, or if one party has made substantial personal or financial contributions to the relationship.

De facto relationships couple sitting on couch

The court will consider all of the property involved in your relationship, which not only means your house but also blocks of land, businesses and motor vehicles. Property will be considered regardless of whose name it is in or when it was first obtained.

Next, the court will consider the contribution each person has made to the relationship. This contribution could be financial, such as wages or savings, or it could concern non-financial duties such as doing housework or caring for children.

The future needs of each person, for example their capacity to work and whether or not they will have to look after any children, will also be taken into account, as the court aims to divide property in a way that is fair and equitable to both parties.

Binding financial agreements

If you and your partner do not want to be covered by the Commonwealth laws for the division of property for people in de facto relationships, you have the option of reaching your own agreement about how property would be distributed and other assets separated if the relationship fell apart. This is known as a binding financial agreement, and it can only be entered into once both people in the relationship have obtained independent legal advice.

You can establish a binding financial agreement at any time in your relationship, even when you are in the process of separating. This can provide financial security for you and your partner and ensure that you both get a fair deal.

Protecting yourself and your property

Even if you and your partner have decided not to walk down the aisle because of all the complications and financial entanglements marriage brings, living together in a de facto relationship can have huge implications for property ownership in the eyes of the law. Even if one or both of you is legally married to someone else, or even if the two of you don’t live together full-time, you could be classified as being in a de facto relationship and your partner could have a claim over your property if the relationship turns sour.

With this in mind, there are several things you can do to protect yourself in case your relationship breaks down, including:

  • Doing your research. Make sure you’re aware of all the legal implications of living together in a de facto relationship. Not only should you familiarise yourself with laws regarding the division of property, but you should also be aware of how living together could affect you in other ways, for example your ability to access Centrelink benefits.
  • Reaching an agreement. Before asking your partner to move in with you, consider whether it could be worthwhile reaching an agreement about the division of financial responsibilities and the ownership of the property. Will your partner be paying rent or contributing to the mortgage? If so, what effect will this have on their stake in the ownership of the property?
  • Getting legal advice. The best course of action for both parties is to seek legal advice. Even if you’re certain your relationship will stand the test of time and you and your partner will be together forever, get some professional advice tailored to your circumstances. This will allow you to work out what steps you need to take to ensure that your property and assets are protected if your relationship ever breaks down.

Image: Shutterstock

Tim Falk

A freelance writer with a passion for the written word, Tim loves helping Australians find the right home loans and savings accounts. When he's not chained to a computer, Tim can usually be found exploring the great outdoors.

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