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Consider this common family law property settlement scenario:-
Party 1 wants to retain the family home and proposes to Party 2 that in exchange for keeping the property they will pay a cash settlement to Party 2 and refinance the associated mortgage into their sole name.
Party 1 plans to refinance the mortgage so that they will have enough money to pay Party 2’s settlement money.
Orders are subsequently made by the Court which provide that Party 1 has 60 days to transfer the property into their sole name, pay Party 2 settlement monies and refinance the mortgage.
Party 1 goes to their bank and is approved for finance, however, day 60 rolls around and Party 1’s Bank is not ready to settle.
What happens now?
When a party fails to make a payment under a Court Order, this is considered a ‘judgement debt’. Under Section 117B of the Family Law Act 1975 interest is payable by the liable party from the date which the Order takes effect until such time as the debt is paid. The interest payable on a judgement debt is calculated as 6% above the current cash rate (e.g., currently 7.85%). Therefore, in the above scenario Party 2 would be able to seek interest from Party 1 for delaying the settlement.
What can you do to avoid the above scenario occurring?
It is important when you are finalising your property settlement to make sure that you understand your banks requirements to ensure that the Orders will give you plenty of time to make sure that you can get your finance sorted.
What happens if you can’t get your finance at all?
If there are no default clauses in your Orders, which set out what is to happen if you cannot get finance, then the Orders will become frustrated and it may be necessary for a further application to the Court if the parties cannot come to an agreement on what should happen. We recommend that to avoid this, parties should ensure that their Orders have default clauses which provide for the sale of property after a period of time if the parties are unable to get finance.
If you have any questions in relation to your property settlement please contact one of our family lawyers today for an appointment.
About the author
Jessica Alexander
Associate
Jessica was born in Bathurst, NSW and moved to Mackay when she was ten where she completed her schooling at Holy Spirit College. She then went on to study business and law at James Cook University in Townsville, but after a few years she discovered her main passion and transferred her studies to focus solely on her Bachelor of Laws.
On completing her degree, Jessica moved to the Sunshine Coast to complete her practical legal training but returned to Mackay after a year to be closer to her family.
Macrossan and Amiet welcomed Jessica to the team as a Trainee Solicitor on 30 March 2020. Jessica was admitted as a Solicitor in the Supreme Court of Queensland on 19 June 2020.
Jessica found her passion for family law while volunteering at Community Legal Centre and a Legal aid provider during her Bachelors degree and practical legal training. Through this experience and her experience at Macrossan & Amiet Jessica has learned the importance of dealing with clients going through the family law with compassion and empathy. Jessica is committed to ensuring her clients get through the separation process as efficiently and stress free as possible.
Outside of work Jessica is an avid reader, loves baking and enjoys spending time with her family.
About Macrossan & Amiet Solicitors
For over 100 years, Macrossan & Amiet Solicitors has been a leading local law firm in Mackay, with offices in Proserpine and Cannonvale servicing the Whitsundays region. Our experienced solicitors provide professional legal services to individuals, families and businesses across regional Queensland.
Whether you need representation in court, assistance buying or selling property, or advice on protecting your assets, our Mackay lawyers are committed to achieving the best possible outcome for you.
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