Real Estate Valuations and Family Law
When parties separate, they will often finalise a property settlement that divides the assets of the relationships between the parties to end their financial relationship once and for all. The first step in this process is to ascertain the value and nature of the property that requires division. It is important to ensure that any real estate valuation relied on in property proceedings is up to date.
Agreeing on the value
Quite often, the most significant and valuable asset held by the parties is real estate (whether it be the former matrimonial home or an investment property). The parties may be able to agree to the value of the property for the purpose of determining the property settlement split. If the property is to be sold in order to divide the assets, the value will simply determined by what the market is willing to pay for it. If the value of real estate requires determination beyond this, this can be achieved by the parties exchanging market appraisals or using online valuation services.
Obtaining a valuation
In the event there is no agreement on the value of the property or the property is not being sold, a valuer can provide a valuation of the property. It is typical for the parties to share the costs of obtaining a valuation report (usually about $1000 in total).
A valuer is a person independent of the proceedings who has valuation qualifications and credentials and is more independent than a real estate agent. A valuation report takes into account the land, which is valued as its highest and best use, including any development potential, as well as the condition of the property at the time of the inspection by the valuer.
Questioning the valuer
Often such valuation reports will value the property at a price that falls outside of the range that is considered to be reasonable by the parties. The Family Law Rules 2004 contain provisions for parties to put questions to the valuer to clarify aspects of the valuation report within 28 days from the date of the valuation report.
When is property valued?
As a general rule, property will be valued as at the time of the final property settlement or final hearing if the matter cannot be settled by consent. This means that there may need to be an updated valuation report completed after the initial valuation obtained as settlement negotiations continue or just before a final hearing, as it is likely that the real estate market has changed. The value of the property may be different to what it was when the proceedings commenced.
If you require legal advice in relation to valuation of real estate in your matter, or determine the value of the assets to be divided, please contact the family law team at Armstrong Legal for advice specific to your circumstance.
If you require legal advice or representation in any legal matter, please contact Armstrong Legal.