Property Valuation for Court Purposes – What is Involved in Family Law Valuations?
Property Valuations and Family Law Property Settlement
Property valuations for court purposes are very helpful for your divorce property settlement. It’s best to find the accurate value of your property and assets when deciding how it will be divided.
Do you have property and feel unsure about what will happen with it during valuation and settlement? Property and finances can get confusing and complicated. So, let’s break it down.
What’s the difference between a property value you might find on a property website and sworn valuation?
A sworn valuation is a formal process of finding the value of a property for the Court. It is presented to the Court with an affidavit signed by the valuer, swearing its validity. It’s a manually made estimation made by a professional valuer using proper methodology and analysis. A property website offers helpful, yet general information. Those websites give a valuation that is less accurate and may not be up to date.
It is also different to a real estate agent’s advice or estimate based on their recent sales knowledge. Remember your property’s value is not the price of other houses in the area, so their opinions are not as reliable.
It is best to get a sworn valuation so that you can have an accurate idea of what you may receive from your property. If you use a less accurate method, it may cause a lot of disagreement and difficulty in your division of property.
Is it just real estate and valuable property that can be formally valued for the court?
Valuation for court purposes isn’t just for houses and other valuable property. It can also be used for a business, trusts, and superannuation, particularly benefit interest funds or self-managed superannuation. It is actually more important to use valuation for these things as they are more complicated financially.
What’s involved in property valuation for court purposes and why is it so important?
Property valuation for court purposes is not required but extremely helpful during your settlement, especially if there is significant dispute over your settlement.
In a family law valuation, a single expert witness, the certified property valuer registered by the Australian Property Institute, will value the property. They are jointly appointed by both you and your ex. They are unbiased and give an independent report. This valuer can be appointed in different ways:
- One partner nominates a few valuers and the other chooses
- Application for the appointment through an independent third-party institution
- A request to the Court to appoint a valuer
Both parties will then instruct the valuer in a letter prepared jointly by both parties.
The valuer will conduct a physical property inspection. They will come up with a fair and current market value price after reviewing the property. Their report is very detailed and gives the most accurate price for the property for your settlement without having to actually sell your property. It will be evidence given to the Court.
What if I don’t want to sell the property? What about the mortgage?
You don’t always have to sell your property in a settlement. Property settlements are not about liquidating all your assets and splitting the money. You have some options to keep your house:
- Refinancing the home: You may buy out your ex and be the one to pay the mortgage. You need to come to an agreement with your ex-partner. Make sure you have enough funds, a good record of repayments and appropriate income and savings.
- Asset swap: For example, if you own a rental property, you may decide to swap.
- Temporary arrangements: You may decide to organise to keep the home until your children finish school to keep consistency in their life.
If you can’t agree, the Court may decide to sell the property and divide it.
How does the valuation impact your property settlement?
Identifying and valuing your property in a pool is the first step of your property settlement. When all your property is valued, the Court will move onto the next steps of the settlement. The Court will determine your contributions, other significant factors, and the test of being just and equitable.
The Court will use the valuation evidence when deciding your settlement and how much you can receive.
You can learn more about the property settlement process in our FAQs.
Learn How to Make Your Property Settlement a Success
Now that the market is fluctuating a lot, how does the valuation work if the market starts to fall?
We know that COVID-19 and recent economic events have led to a fluctuating market. Remember, the value of property is determined for the date of the division of property, not when you separate.
To avoid much loss, the best approach is to settle as quickly as possible.
If you’re worried about time constraints due to changes in the market, you may decide to enter into a Binding Financial Agreement that can accommodate for change in circumstances. This means you will not go through the Court. Make sure to seek legal advice.
Should you delay your property settlement?
You shouldn’t wait to do your property settlement! If you are already divorced, you only have one year to settle property. While there is no time limit on your property settlement if you haven’t gotten a divorce order yet, it is not an automatic process. Things can get messy the longer you wait to settle property. You can learn more here.