The Family Law Act 1975 (Cth) (the Act) determines how to divide property in the event of separation of a married or de facto couple. The courts will consider the general principles of family law when reviewing a property settlement dispute, focusing on the parties’ financial contributions, non-financial contributions and future requirements.
One of the first steps before a property settlement, however, is to identify the parties’ assets and their worth. Property valuation will help determine how the court should divide the assets in the event of separation. Below, we will explore three common scenarios when it comes to property valuation and the process of valuing property.
1. Parties Agree on the Value of the Property
If two parties in a property settlement dispute agree with the value of the property, the court will accept the agreed valuation. It is the best case scenario when seeking orders from the court. Parties can come to an agreed valuation of the property by consulting the market and looking at similar houses in the same location to determine value. Each party may also seek further advice from real estate agents in the form of appraisals.
2. Parties Cannot Agree on the Value of the Property
If the parties cannot come to an agreed value of the property, they may seek the advice of a valuer. The court will then require the valuer to provide a sworn valuation in the form of an affidavit which the parties can file in court.
The party seeking the valuer’s advice must pay for their services. Alternatively, they can come to an agreement with the other party so that they can split the costs equally. Although there is no set rule, the court may also make an order to divide the costs of the valuer evenly between the parties.
3. Parties Cannot Agree on a Valuer
Sometimes parties may not agree on which valuer to engage for the property valuation. If this is the case, the parties can either:
- Apply for an appointment of a valuer through an independent institution (e.g. through the Australian Property Institute).
- Request that the court appoints a valuer.
- Engage separate valuers. The valuers will need to attend a conference before any hearing in the court and prepare a report as to the issues discussed. The court will use this report to examine any issues that remain in disagreement.
- Allow the court to decide on the value of the property after both parties provide evidence, including reports from valuers if available.
How Are Assets Valued?
The court does not provide a method as to how a valuer should value assets. Qualified valuers should, however, be able to provide details of the factors they take into consideration when coming to a valuation.
Valuers tend to value an asset based on its market value (i.e. the amount a willing buyer would be ready to pay for the asset). If the parties agree to a property valuation, usually the court will not question how they achieved the number. If the parties do not agree to a property valuation, the court will likely take into consideration the method at which the valuer came to make the valuation.
What is the Process of Valuation?
The Act and the Family Law Rules set out specific requirements for the ordering of valuation reports. The parties must take this into consideration when they provide instructions to the valuer. Lawyers cn typically assist in appointing independent valuers and ensuring that parties obtain valuation reports in compliance with the Act.
If you have any questions or need assistance drafting a binding financial agreement that addresses property settlement, get in touch with our family lawyers on 1300 544 755.