NSW Property Settlement - Caveat on Property - How Much is Wife Entitled to?

[JAMES HALLEEN]

Hello there,

8 years ago, my mother put a caveat on my unit when my wife and I bought the unit as we did not have enough money. We are currently paying off a mortgage of $100,000. The caveat is $200,000.

I would like to divorce my wife. How much is she entitled to in property settlement?

 

[Rod]

Do you mean how much is your mother entitled to if you divorce?

Did your mother lend you $200K? Or just provide a guarantee for $200K? If she lent you money, under what terms?

 

[JAMES HALLEEN]

Hi Rod,

I borrowed 200k from my mother, so my mother has 200k caveat on the house. My wife and I are currently paying a mortgage of 100k.

How much is my wife entitled to in a divorce?

Cheers

 

[AllForHer]

She's not 'entitled' to some percentage that's written in law. The way it works is that a property settlement can be anything you both agree to, and failing agreement, you can apply to court which will ask four questions:

1. What's the total value of the shared asset pool?
2. What were the financial and non-financial contributions of each party?
3. What are the future needs of each party?
4. Is the settlement just and equitable?

Thus, there's no explicit formula, it's dependent on the circumstances of your case. She will be entitled to a portion of the value of the house, though, we just can't say with any definitive numbers exactly how much.

 

[Rod]

BTW, 1. is Total value = marriage assets - marriage debts

eg House asset = house value - ($200K +$100K)) >> House asset = house value - $300K

 

[Tim W]

So my mother has 200k caveat on the house.

Ummmm..... I am slow to use the term "caveat" for what you have done here.
In order for there to be a caveat on the property, she needs to have what the law calls a "caveatable interest".
She may or may not have one, depending on structure of the deal.
Bear in mind also that she and/or you may have used the term incorrectly as you were setting things up.

Caveats themselves don't create charges over land (People often get this wrong. I blame American TV)

Depending on how you set it up, she might have a security interest (for example, if she is a morgtagee), or
she might have an equitable interest (such as if the loan secured by some other form of interest in the property, such as a share of any proceeds of a future sale), or
she might have a part share of the property itself (as say, a tenant in common), or
she might simply be somebody to whom you personally owe an unsecured two hundred thousand dollars.

What you do next depends on the nature of the agreement.

If you want to know if there is, in fact, a caveat on the property, do a title search (or have the lawyer assisting your family law matter, do it).