Does a Party Have a Caveatable Interest in Real Estate property not owned by one or other of the parties to the marriage or de facto relationship?

18/01/2017

Often we are faced with questions as to what action can be taken by one party or another when the real estate owned by the family is in one name and not in both names.

There are many reasons why a property may not be in the name of both of the parties to a marriage or a de facto relationship.

In addition there may be cases where the land at which the parties resided was not registered in the names of either of the parties to the marriage or the de facto relationship.

In one such case Watson & Watson acted on behalf of Matthew, the husband who was married to Shayne.  The marriage had broken down and Matthew and Shayne were in dispute as to the assets that would be available to be considered in the distribution of the assets of the marriage between the parties.

Matthew’s father owned a property of considerable value at the time of the marriage of Matthew and Shayne and had owned that property for many years prior to the marriage.  A few years after the marriage Matthew’s father agreed and allowed Matthew and Shayne to construct a second house on the father’s property.  Matthew paid all the construction costs of the house.

Matthew and Shayne lived in the house that they built on Matthew’s father’s property for approximately 5 years and thereafter Matthew and Shayne separated.

The issue that arose was what was the appropriate adjustment in favour of Shayne in light of the costs incurred in constructing the house on Matthew’s father’s land.

The land due to its position had increased in value by a significant sum which was not directly related to the value of the new residence that had been constructed on the land by Matthew and Shayne.  After separation Shayne moved out of the house and Matthew continued to live in the house.   Matthew’s father continued to live in the original house on the property.  There was no dispute between Matthew and his father.

One issue that arises in such circumstances is whether Shayne or Matthew would have an interest in the property.

Firstly the mere fact that there is a marriage does not give a right to an equitable interest in the land that may be owned by one or other of the parties or the land that the other party may have an entitlement to by way of equitable equity for example by way of a trust, resulting trust, a constructive trust or any other equitable principle by which for example Matthew may have a claim on the land.

In this particular case Matthew made all the financial contributions in relation to the cost of the house that was built for Matthew and Shayne.

Matthew may have an interest in the land held by his father and as such in our view, would have a caveatable interest or right to put a caveat over his father’s land.

However, if Shayne made no appropriate contribution in relation to the cost or acquisition or improvement of the land then Shayne has no equitable interest in the land.  In those circumstances Shayne would not have a caveatable interest in the land.

However the value of Matthew’s equitable interest in the land to which Matthew had a right is an asset to be considered by the Family Court in the ascertainment of the matrimonial pool of assets and of the adjustment of rights in relation to the property matters.

Another issue that arises is the valuation of that interest.  This can be ascertained, however it is not a simple valuation of a property but rather a valuation of the equitable right that Matthew has in his father’s land.

In this particular case Matthew’s equitable interest in the land was not the sole asset to be considered in allocation of the property as between Matthew and Shayne.

Full disclosure of other assets was given and Matthew gave disclosure of the possible right in relation to the interest in land owned by his father and the factual matters that surrounded that right.

The experienced Solicitors at Watson & Watson were able to negotiate a resolution.  There was a relatively minor adjustment in relation to the value.  The issue of the value of the “right” was based on the expected recovery in a dispute between Matthew and his father and the cost of obtaining an equitable outcome.

In this particular case the appropriate documentation for the resolution was by way of a Binding Financial Agreement and associated documents.  This is not always the case.

The above is one of many examples that arises in which there are interwoven relationships between the parties to the marriage and to further extended family some of which are documented and some of which are not documented.

If you have issues that are not straight forward then you should contact the experienced Lawyers at Watson & Watson who can assist firstly in understanding the facts and related issues and will advise on the legal effect of the relationship and negotiate on your behalf to attempt to achieve an excellent outcome.

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