De facto laws, rights and entitlements in Australia

In Australia, de facto couples often wonder about their legal and financial rights and entitlements if they separate from their partner.

People worry that they’re going to lose their house, or have to give their de facto partner half of their wealth, or otherwise defend a claim from the other party.

While de facto relationships share many of the same rights as marriages, there are important distinctions in the process of claiming property if the relationship ends.

Can My Ex-Partner Make a Claim on My Property?

One of the most common questions de facto couples face is whether an ex-partner can claim a share of their property. Under Australian law, de facto partners have the right to apply to the court for a property settlement, just like married couples. However, there is no automatic entitlement to a share of property — it must be determined by the court.

The Family Law Act gives de facto partners the opportunity to make a claim, but only if the relationship lasted for at least two years. It’s important to note that this period does not need to be continuous.

There are exceptions to the 2-Year Rule

While the two-year period is a common threshold, several exceptions allow claims to be made for relationships that don’t meet this duration:

Children of the Relationship: If the couple has children, a claim can be made, regardless of the relationship’s length.
Registered Relationship: A de facto relationship that is officially registered under the law of a state or territory may bypass the two-year minimum requirement.
Substantial Contributions: If one party made significant financial or non-financial contributions to the relationship, such as funding home renovations or contributing to a joint asset, they may be eligible to make a claim, even if the relationship lasted less than two years.

In cases where an exception applies, de facto partners can seek orders related to property division, spousal maintenance, or parenting, provided they first attempt mediation or counselling to resolve the matter privately.

Common Misconceptions about De Facto Property Claims

Many people believe that living together automatically entitles a de facto partner to a share of the other person’s assets. However, this is not the case. The court carefully considers the unique financial and non-financial contributions of each partner when deciding how to divide assets.

For example, if one partner brought a significant amount of equity into the relationship through property ownership, the other partner does not automatically gain a 50% share simply by living together. The court examines factors like the length of the relationship, financial contributions, and shared responsibilities. Our article Myth of the 50/50 Split offers detailed information about how the court makes decisions about property settlement based on the guidelines set down by the Family Law Act 1975.

It’s also important to note that making a claim through the courts is not an easy thing. It is expensive, stressful and time consuming.

Time Limits for Filing a Claim

It’s crucial to remember that de facto partners only have two years after the relationship ends to apply for property orders. Failing to file within this timeframe usually means needing special permission from the court, which can complicate the process.

Unlike property and financial matters, children’s issues do not have the same time restrictions. Parents can apply to the court for parenting orders at any time. However, it’s always recommended that parents try to resolve these matters amicably and prioritise the best interests of the children.

So let’s take a look at some real life scenarios

1. Short-Term Relationship with No Children

Scenario:
Jenny and Alex were in a de facto relationship for 18 months before they separated. During their time together, they shared living expenses but did not have any joint property or significant assets together. Alex paid rent for the apartment they shared, while Jenny contributed to groceries and utilities.

Likely Outcome:
Since their relationship lasted less than two years and no exceptions apply (such as children or registered relationship), neither party can make a significant claim on the other’s property. Even though Alex paid more towards rent, this short-lived relationship doesn’t meet the court’s threshold for a property claim. Unless Jenny can prove substantial contributions to shared property or financial assets, her chances of claiming any portion of Alex’s property are slim.

2. Long-Term Relationship with Children

Scenario:
Sarah and Michael lived together for 10 years and have two young children. During their relationship, Sarah stayed home to care for the children, while Michael worked full-time and contributed financially to the household. They purchased a home together, with Michael paying the deposit and mortgage, but Sarah provided the primary childcare and maintained the home.

Likely Outcome:
In this case, the court would likely view Sarah’s contributions as equally valuable, despite not being financial. When determining how to divide the assets, the court will consider Sarah’s role in raising the children and maintaining the home, alongside Michael’s financial contributions. The property and assets would likely be divided to ensure fairness and to provide for the needs of the children.

3. Long-Term Relationship Without Children

Scenario:
Steve and Tom lived together for 12 years in a de facto relationship but did not have any children. They owned a house together, with Tom providing the deposit and Steve paying for renovations that significantly increased the property’s value. Over the years, both partners contributed to household expenses and improvements.

Likely Outcome:
Even without children, the court would consider Steve’s substantial contributions to the relationship, particularly the renovations and shared household management. The equity in the house would likely be divided, reflecting both partners’ input.

4. Overseas Partner with Significant Asset Disparity

Scenario:
James, a successful business owner in Australia, entered into a de facto relationship with Maria, who had recently moved from overseas and did not have significant assets. James owned multiple properties and had a substantial investment portfolio, while Maria had no financial assets. They lived together for four years before the relationship broke down.

Likely Outcome:
In this case, a significant disparity in assets exists between the two partners. Without a financial agreement in place, Maria may be entitled to make a claim on James’ assets, particularly if she contributed in non-financial ways, such as managing the household or supporting James’ career. Lawyers often recommend financial settlements in such cases, where the lesser-earning partner is compensated to ensure fairness after a relationship breakdown.

Every de facto relationship is unique

The bottom line is every de facto relationship is unique even though they share common threads and the good news is that you can take steps to avoid court or protect your assets from future claim by using a Binding Financial Agreement (BFA).

Binding Financial Agreements: Protecting Your Assets and Giving you Peace of Mind

To avoid disputes, many de facto couples opt for Financial Agreements, which outline each partner’s rights and responsibilities should the relationship end. A financial agreement can prevent future property claims and give both parties peace of mind. These agreements allow couples to settle matters privately, without court involvement, and relinquish their right to make a claim on the other’s assets.