31 July 2020
Property settlement - Liability for mortgage payments and credit for increased equity
Our understanding is that where one party to property settlement proceedings remains living in the former matrimonial home and the other party is renting another property that:
1. The party living in the former matrimonial home is liable for mortgage payments for that property; and
2. The party making the mortgage payments does not get any credit for increasing the equity in the former matrimonial home, and the equity would be divided equally between the parties.
Are these generally accepted principles? What is their authority?
Thank you for the question.
The treatment of post-separation mortgage payments varies and the obligation as to who should pay depends on the facts of the case.
As to whether the person living in the property should be paying ‘occupation rent’ see Moore & Moore [2008] FamCA 32 at [657]-[659].
As to the treatment of post-separation mortgage payments see Jacobson and Jacobson [1988] FamCA 15. Generally, post-separation mortgage repayments are treated as post-separation contributions in the same way as post-separation parenting contributions. However, this does not automatically mean there will be an adjustment, as the post-separation contributions may be different but equal overall.
Regards
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