Unravelling De Facto Property Settlement – Your Rights and Entitlements

If you’re in an unmarried partnership and it’s hit the rocks, it’s crucial you know the truth about a de facto property settlement.

It determines how assets are shared after a relationship split — and, the rules are virtually the same as those that apply to married couples. Therefore, ensuring you understand the process, your entitlements, and the strict time frame means you’ll receive the share you rightly deserve.

What Is a De Facto Relationship Property Settlement?

If two people live together as a couple, but remain unmarried, they’re typically known as being in a de facto relationship.

The Family Law Act (1974) Section 4-AA explains that two people — of the opposite or same sex — are de facto partners if they have a relationship as a couple living together on a genuine domestic basis.

You automatically qualify if you have been together for two years or more, or have recorded your relationship with the Registry of Births, Deaths, and Marriages. A court may also consider your relationship to be de facto by alternative supporting evidence — such as raising children together or the sharing of bank accounts.

If the relationship subsequently breaks down and results in separation, the assets of the couple need to be shared between the two parties. This is what’s known as a defacto property settlement — sometimes referred to incorrectly as a de facto divorce settlement.

It’s important to remember that the word ‘property’ in this context includes more than just your home — it also encompasses your cash, furniture, heirlooms, cars, investments, and other valuable capital.

How Is De Facto Separation Property Settlement Decided?

The process for agreeing a de facto property settlement is the same as that for married couples.

The ideal scenario is you and your ex can come to a mutually acceptable agreement on the division of assets. This is the smoothest, most cost-effective, and least confrontational route — particularly preferable if there are children in your family.

If this isn’t immediately possible, yet you still both wish to resolve the settlement without battling it out in court, there are three other possible routes:

Legal Advice — Negotiation and Mediation

Taking legal advice from a Family Lawyer as soon as you consider separation — or discover your partner wants to end the relationship — is always recommended. However, legal counsel and guidance can be extremely valuable if you have been unable to reach an informal agreement with your ex.

Your legal representative can negotiate on your behalf with your ex-partner or their advisor. Furthermore, they can suggest alternative mediation routes — such as Family Dispute Resolution — to reach a concord.

Consent Order for De Facto Relationships

If you can make an informal agreement with your ex de facto partner on the asset split — or your mediator or lawyer has achieved one on your behalf — you can have the arrangement formalised by the FCFCOA (Federal Circuit and Family Court of Australia) with a Consent Order.

Validated by the court and legally enforceable, it offers more security and peace of mind than an informal settlement. Furthermore, it’s pleasingly versatile, allowing you to include other areas of agreement with your ex — for example, on parenting or maintenance.

Binding Financial Agreement for De Facto Relationships

A Binding Financial Agreement is a contract made between you and your partner that details how your assets and finances are divided in the event of a de facto relationship break-up. This can be made at the beginning of a de facto relationship, during the partnership, or after a split.

The downsides are that it requires significant legal representation on both sides to formalise, it’s difficult to amend, and means you give up your rights to a just and equitable share under the Family Law Act.

Family Law De Facto Property Settlement

If you and your partner are unable to agree, either formally or informally, about your property settlement — the court will decide how your assets will be divided.

A de facto property settlement under the Family Law Act has to be just and equitable — which doesn’t mean a 50/50 split. Instead, your and your partner’s final share depends on what the court deems as being fair.

In making its decision, the Family Court considers:

  • Total value of the assets — including property and investments and less liabilities.
  • Value of direct financial contributions made by both parties — salaries and wages, etc.
  • Value of indirect financial contributions made by both parties — for example, inheritances.
  • Non-Financial contributions made by both parties — such as raising children, or working as a housewife/husband.
  • Value of future requirements — for example, the needs of children, health, and age.

Time Frame for a Defacto Property Settlement

Under the Family Law Act, you have two years from the date of your separation to apply for a property settlement

Therefore, it’s crucial that not only do you have a record of the date your relationship finished — but also have evidence such as an email, SMS, or letter that states in writing that the partnership is over. 

It’s not unusual for a disgruntled former partner to try and delay settlement by claiming that the date of separation is incorrect. That’s why recording and proving the separation date is one of the ten crucial steps outlined in my Guide to Separation checklist.

If two years have passed, you haven’t submitted a claim, and you find yourself in a de facto property settlement out of time scenario — speak to a Family Lawyer immediately.

Under certain circumstances, the Family Court may consider an application for a property settlement. Most usually, it’s only permitted when a child or children are involved in the relationship — and would otherwise suffer hardship or deprivation if a defacto settlement of property wasn’t agreed.

Final Thoughts on De Facto Relationship Property Settlements

Being unmarried doesn’t mean you don’t get your fair share in the event of a relationship breakup.

Property settlements at the end of a de facto partnership offer you the same rights and entitlements as married spouses — as long as you adhere to the statutory regulations and time frames.

If you’re considering breaking up with your partner — or you’re in the process of a split — speak to Falzon Legal now. As Sydney’s expert in Family Law, our professional lawyers will guide you compassionately through your de facto property settlement options.