If one person remains in the house after a relationship breakup while the other moves out, they can be compensated through the payment of “occupational rent”.
Q: My husband and I split up, and we initially agreed to put our house on the market as soon as the bathroom could be renovated.It was hard living together, so I moved in with my sister, while I was waiting for the house money to come through. Then he changed his mind about selling because he said the property market wasn’t as good.
I understand this, but it might be years before it turns around. He says that I can’t make him sell the house, is this right? Also, I found out that he has rented out a room in the house, and he has the granny flat underneath rented on Airbnb.
I’m shocked he would do this as he knows I wouldn’t be comfortable having our things used by people I don’t know. I imagine he is also making a fortune in rental income!
A: First of all, yes, your husband is right. If both of you are legal owners, then neither of you can decide to sell the home, or make the other sell the home, unless directed by the Family court.
The Family Court
Getting a court order from the Family Court can be a slow process. Once you’ve applied, it can take 12 months or more for your case to be heard.
If there is nothing else unusual about your case, I’d expect the judge to find in your favour and order the house to be sold.
You would need to provide a recent valuation from a registered valuer, and the judge would specify that, in the sale, your husband could expect no less than half of the valuation amount (less sales costs like advertising and agent’s fees).
Going to court can also be expensive, with court costs and legal costs to factor in.
It is possible to go to court without a lawyer, which will save you money. That is tempting, but you will need to be aware of the Family Court rules and the law that covers your case.
You would have to present your evidence, and question other witnesses as well. These are things a lawyer would normally do on your behalf. If your case is successful, your husband will have to pay or contribute to your costs.
Once you’ve engaged a lawyer and have notified your husband more formally of your intentions, he may decide to avoid the legal and court costs and agree to sell the house.
There is good news about being able to get some of your husband’s rental income. While you’re not living in the home, you can ask him to pay you “occupational rent” to compensate you, for him being able to utilise and enjoy your share of the capital in the home.
This is a common arrangement for separated couples, where one party is still living in a jointly-owned home. However, there are no standard guidelines as to when it is payable, or how it should be calculated.
Usually couples come to their own agreement or negotiate the amount through lawyers. If they can’t agree, and the matter goes to court, the judge considers factors such as:
• Who is paying the outgoings such as mortgage, insurance and rates.
• The housing costs paid by the partner living elsewhere and their indirect costs eg travelling a greater distance to work.
• Whether there has been a delay in claiming the occupational rent.
Usually, the court will calculate the amount using a current market rental valuation, less a property management fee.
Try to agree the amount with your partner, and start receiving payments as soon as possible. If he doesn’t agree, you can raise this in the Family Court hearing, if your case progresses to court.
Most couples see the value — and justice — in deciding these details themselves. If not, then that is what courts are for.
Make a new agreement
Is it possible that you could talk through your issues and come to an agreement you could both live with? You could include details like when you would sell the house, and under what terms (eg selling no later than in one year’s time, for no less than a current registered valuation).
Hopefully you could agree on where each of you will live, who will have responsibility for the payment of bills, and who will benefit from the rents, as well as addressing your concerns about who stays in the house.
You can make this agreement legally binding by having each of you sign the document and having it witnessed in front of lawyers.
This will cost less than going to court and will be a lot less stressful.
When two people own a home together, one cannot insist on the sale if the other does not want to, unless they have a court order. Unfortunately, it can be expensive to go to court and take months to get a result. It is often better for couples to work together on a solution that suits both parties.
If one person remains in the house while the other moves out, they can be compensated through the payment of “occupational rent”.
I recommend that when couples separate, they stay living in their home together until their settlement has been finalised, if at all possible.
In my experience, this helps couples to stay on good terms and reach agreement more quickly than if they were living apart.
This article was first published in the New Zealand Herald.