Working out what to do with property assets when a couple decides to separate can be a difficult, stressful process. And it’s not made easier by the cost and inevitable delays involved if you need to go to court to have orders made about how everything should be divided.
That’s where mediation offers a compelling alternative. This dispute resolution method provides a significantly cheaper, faster and generally less stressful means of resolving a family dispute about property, avoiding the need to go to court. In contrast to the adversarial nature of the court process, mediation emphasises collaboration and cooperation between both parties to reach a resolution you can both live with, and thereby move forward with your lives.
Here we’ll look at how the mediation process works when it comes to dividing property assets between a separating couple. You should always seek independent legal advice about whether mediation is suitable for your circumstances to resolve a family property dispute.
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How the mediation process is conducted
When a couple separates and there are children from the relationship, Family Dispute Resolution (FDR) to discuss the living and care arrangements for the children is a compulsory pre-court process under the Family Law Act 1975. This is not the case where only property orders need to be decided, but for the reasons mentioned above mediation remains a useful means to achieve property settlement to avoid going to court.
Mediation is conducted by a trained, neutral mediator whose role is to assist you and your ex-partner find a workable solution to your property dispute. The mediator facilitates a calm, civil and collaborative environment so that both parties can ask questions, raise issues and negotiate a split of real estate, superannuation, bank accounts and other financial assets accumulated during the relationship.
The process is generally conducted in a suitably appointed meeting room at a mutually agreed location at a mutually agreed time. Ideally, the venue has two ‘breakout’ rooms to which each party can retire to discuss the issues with their legal representative (if present) or to allow the mediator to conduct a ‘shuttle’ negotiation between both parties to achieve a resolution. Mediation may achieve a settlement of the issues between the parties in one session, or a number.
The mediator does not decide any of the issues involved in the property matter, nor offer legal advice. They are there solely to provide a structure within which both parties can discuss their issues in an orderly, civil fashion with a view to a possible agreement.
Preparation: A successful mediation requires some preparation, particularly in regards to supporting material. Documents such as mortgage agreements, land titles, vehicle registrations, bank loans, overdraft facilities, credit card statements, superannuation statements and business documents may all be necessary.
The purpose of collating these documents is to allow you to identify and confirm the assets each party held before the marriage or relationship, which ones were accumulated during the relationship, and whether any assets were acquired in the period after divorce or separation. Your legal representative can help with this process.
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The role of a legal professional in mediation
It should be noted that while you can have a legal representative present at a mediation, unlike in court lawyers do not lead the contribution of each party. Instead, your lawyer can be present to offer support and advice on your legal position at the appropriate time. Mediation is primarily designed to empower you and your ex to form your own negotiated settlement of property matters.
The reason you should speak with a legal professional with expertise in family law matters before entering into mediation is that they can provide you with an understanding of how assets are distributed according to the Family Law Act 1975. In doing so they can give you an idea of what a settlement outcome might look like if you progressed the matter to the Family Court. Knowing this information will often give both parties additional motivation to resolve through the mediation process.
Hopefully, an agreement on how to divide the property assets can be reached through mediation. If so, the mediator will record the details of the agreement in a document. To make this agreement legally binding and enforceable against both parties, however, a binding financial agreement (BFA) or Consent Orders are required. Your legal representative will be invaluable in this process.
BFAs can be made at any time during a relationship – including as a result of mediation after a separation or divorce – and detail how assets and money are to be divided, and each party is to be maintained when the relationship ends. A BFA is only legally binding and enforceable where each party has received independent legal advice and the agreement has been signed by both parties and their legal representatives.
A BFA will be unenforceable if, in its formation, there is dishonesty; the agreement cannot be practically carried out; the care and welfare of children are affected, or; if there was unethical or unfair behaviour by one of the parties.
Consent Orders are the Family Court’s formalisation of an agreement between a couple. An agreement reached by two people through mediation, for instance, can be formatted as Draft Consent Orders to be filed with the Family Court. The Court reviews the Orders based on whether they are ‘just and equitable’ to both parties and, if so, confirms the Consent Orders to make them legally enforceable. The just and equitable requirement constitutes a significant difference between Consent Orders and a BFA.
Let us help you
Mediations Australia can help you through all stages of the process, including advising on the appropriateness of mediation for your property matter, helping you negotiate with the other party, advising on your likely options with regards to the division of property assets, and formalising any agreement you may reach.