Domestic partners are often jointly responsible for borrowings against the matrimonial home.  Upon their separation, who is responsible for the mortgage and outgoings?

Where both parties have mortgaged the property to a lender, they remain responsible for making the mortgage payments each month.  It is possible for couples to agree as to how the mortgage will be paid.  Generally speaking, this is the most sensible way to ensure that the mortgage will continue to be paid and avoid credit complications or the lender foreclosing.

Usually, one person moves out of the residence and has their own rent obligation.  This can make it difficult for that person to pay the mortgage and/or the rates.  Often the remaining person is a hands-on parent without employment.  This leaves them in a difficult position with respect to the mortgage.

If this occurs, it is sensible to make contact with the lender and seek an adjustment to the monthly payments.  It is usually the case that a lender will agree to assist the couple rather than have the mortgage unpaid and associated difficulties.  If this does not work, then there are a number of alternatives:

  1. The property can be sold. Generally, this is not the preferred option.
  2. The couple can continue to live in the same property with resultant savings on rent.
  3. Often the person who is earning an income can meet the payments temporarily whilst the stay-at-home parent seeks employment.
  4. The property can be rented out so that the rental income covers part or all of the mortgage.

Sometimes no agreement can be reached and the parties may make Application to the Family Court seeking an Order from the Court as to each party’s share of the mortgage, an Order for one party to make the mortgage payments, or that the property be sold.

In the event that you seek legal advice with respect to such matters, please contact Laurie Cavill or Alan Alpass at our offices on 9725 0377 or 9088 8664.