The Ex-Files: Jeremy Sutton - Should we buy property together after we separate?

While the thought of no Body Corporate fees may seem enticing, it can provide headaches with insuring the property. Photo / 123RF

OPINION:

Q: I have separated from my partner of 35 years. We have a home that he is going to remain living in as he also runs his business from the property. He cannot afford to buy me out of the home so has suggested helping me buy a property instead. I am looking at a townhouse as our children have grown up so I'll be living alone. I have found one that I really like. My partner is refusing to agree because it does not have a Body Corporate. What can I do?

Clean break

Deciding what to do with the family home after a separation can be incredibly difficult. One party may want to retain the home to provide children with stability, to remain in a neighbourhood they could not afford to buy a new home in or, as in your case, they have established a business at that address. Usually the party that wants to remain in the home will purchase the other's interest in the property. If the parties cannot agree who will remain in the home, it is often sold.

For most couples who separate it is best to divide the relationship property as soon as possible. This allows you both to have a clean break and move on with your lives. While it may seem a good idea to own property together now, it can become messy if you stop getting along as well in the future. For example, if one party gets a new partner your relationship may break down.

Applying for a Court Order

If you decide that you want to sell the family home but he is refusing to leave, you can apply to the Family Court for an order to sell the property. This will typically be granted in your favour if his refusal to sell the home or buy you out is preventing you dividing your relationship property and allowing you to secure a new home.

Once the home is sold or he purchases your interest in the property, you will be free to buy a property on your own using your half of the equity.

Property sharing agreement

If you choose to purchase the new property with your partner, it is important to enter into a property sharing agreement. An agreement records how the property will be owned and how each party's ownership share will be recorded on the title. It can also specify who is responsible for maintaining the property, including the payment of insurance, rates and repairs. It should also define a process to resolve disputes and what happens if one party wants to sell their share.

Townhouses with no Body Corporate

It has become increasingly common for apartments and townhouses to be advertised for sale without a Body Corporate. While the thought of no Body Corporate fees may seem enticing, it can provide headaches with insuring the property. I consulted with insurance law expert, Emma Gabor, to expand on these issues.

Most townhouses these days are being marketed as freehold, with no body corporate fees despite being built with common walls and common foundations. Insurance companies are wary to insure these properties as they are insured individually. This means that if there is damage to the common property, each owner and each insurer will need to be consulted about the repairs. This makes things extremely difficult, especially with freehold titles where owners have veto powers.

If a townhouse suffers significant damage (for example, through fire or earthquake) it may not be possible to repair it without demolishing it or affecting the unit next door. As a result, some insurance companies are refusing to insure individual units. They are willing to provide insurance to the full development but not individual units.

Other insurance companies will agree to insure individual units if the development has less than five. However, the insurance does not include the common property. That would leave the owner only partly insured.

Summary

Deciding what to do with the family home after separation can be a challenge emotionally and financially. It is common for one party to buy the other out or sell the property. It is uncommon to continue to own property together as it prevents you from having a clean break. Once you have your equity from the home, you can purchase a townhouse. Be wary of townhouses that do not have body corporates as it may prevent you from obtaining insurance for your property.

• Jeremy Sutton is a senior family lawyer, specialising in divorce cases where there are significant assets, including family trusts and complex business structures.