How to Sell Property During a Divorce in Australia

The legal position on property sale during divorce

In Australian family law, property held jointly (or in either party's name) is subject to the property settlement process under Part VIII of the Family Law Act 1975. Neither party can unilaterally sell jointly owned property during or after separation without the other's consent — regardless of whose name is on the title.

The family home and any investment properties are typically among the largest assets in the property pool. How they are dealt with — sold, transferred, or retained — is often the central dispute in a property settlement. Understanding your rights and obligations before taking any steps is essential.

Until a property settlement is finalised (either by agreement or court order), both parties retain their legal interest in jointly owned property. Selling without the other's consent would require them to sign the transfer documents — which they can refuse. The only mechanism to force a sale over objection is a court order.

When both parties agree to sell

If both parties agree the property should be sold, the process is relatively straightforward:

1. Appoint a real estate agent — ideally by agreement, but if you cannot agree, a court can appoint one
2. Set the listing price and terms — again by agreement; significant disagreement on price can be resolved through an independent valuation
3. Both parties sign the agency agreement and, at exchange, the contract for sale
4. At settlement, the proceeds are held in trust (typically by a solicitor or conveyancer) pending agreement on division
5. The net proceeds (after mortgage repayment, agent fees, legal costs) are divided in accordance with the agreed property settlement

Even where both parties agree on the sale, disagreement on how the proceeds are divided is common. This is a property settlement question — which means the net proceeds are part of the overall property pool and are divided according to the four-step framework applying contributions and future needs, not necessarily 50/50.

When one party refuses to sell

If your ex-partner refuses to agree to sell the property, your options are:

• Negotiate through mediation: The fastest and cheapest option. A mediator helps both parties explore the reasons for the refusal and work toward a resolution — which might be an agreed sale, a buyout, or a deferred sale arrangement.
• Apply to court for a sale order: The FCFCOA can make orders requiring the property to be sold — including appointing a trustee for sale if one party is obstructing the process. Court proceedings are slower and more expensive but are available where mediation fails.
• Partition proceedings: In some circumstances, proceedings in the Supreme Court under state legislation can force a sale of jointly owned property. This is a separate jurisdiction from family law and is used less commonly since the Family Law Act provides adequate jurisdiction in most cases.

Refusal to agree to sell is often a negotiating position rather than a final stance. Understanding what lies behind the refusal — fear of homelessness, attachment to the property, disagreement about price, concern about where the proceeds will go — is the key to resolving it. A skilled mediator does exactly this.

When one party wants to keep the property

It is common for one party to want to retain the family home — often the primary carer of the children, who values continuity for the children's schooling and routine. If one party wants to keep the property:

• They need to buy out the other party's share — paying the other party an amount equal to their share of the property's net equity
• They need to refinance the mortgage into their own name (or with a new co-borrower) — the bank will need to be satisfied they can service the loan independently. This is often the practical obstacle — the keeping party may not qualify for the loan on a single income
• They may need to offset the other party's property share against other assets — for example, the keeping party might receive the home and the other party a larger share of superannuation or cash

If the keeping party cannot refinance but is committed to retaining the property, options include: a deferred sale arrangement (property sold when the youngest child finishes school), a shared ownership arrangement for a fixed period, or assistance from family to fund the buyout.

How sale proceeds are divided

Sale proceeds are not automatically split 50/50. They are divided in accordance with the property settlement — which applies the four-step process (identify, contributions, future needs, just and equitable) to determine each party's share of the overall pool.

The net proceeds (after repayment of the mortgage, agent commission, legal costs, and any other agreed deductions) form part of the overall property pool. Where the property is the major asset, the division of proceeds will broadly reflect the division of the overall pool — but this must be calculated as part of the full property settlement, not in isolation.

Mediated agreements about proceeds should be confirmed by a lawyer and formalised as consent orders or a Binding Financial Agreement before the property is sold, or simultaneously with the sale — to avoid disputes about division at settlement.

Tax considerations when selling property during divorce

Key tax matters to be aware of:

• Capital gains tax (CGT): The main residence exemption applies to the family home if it has been your primary residence throughout the period of ownership. However, where one party has moved out, the exemption may be limited. In family law property transfers (not sales, but transfers between parties under a court order or written agreement), roll-over relief applies — the CGT event is deferred until the receiving party later sells the property. Speak to a tax adviser about your specific circumstances.
• Stamp duty: In most Australian states, transfers of property between former domestic partners (including under court orders or binding written agreements) are exempt from stamp duty or attract a concession. This exemption applies to transfers between parties, not necessarily to sales to third parties. Check your state's exemption rules.
• GST: GST does not apply to sales of residential property by private individuals. If the property is a commercial or investment property used for business purposes, the GST position is more complex.

Tax advice from an accountant familiar with family law property transfers is important before finalising any arrangement — particularly for investment properties, business real estate, or properties that have not been the primary residence throughout the period of ownership.

The mortgage during separation

Who pays the mortgage during separation — before the property settlement is finalised — is a critical practical question. Important points:

• Both parties remain liable for the mortgage until it is refinanced or discharged, regardless of who lives in the property
• Non-payment harms both parties — a default affects both parties' credit records and risks the mortgagee taking possession and selling the property under power of sale
• Occupancy costs — the party living in the property is generally expected to contribute to its occupancy costs (mortgage, rates, insurance). In some property settlements, payments made by the occupying party toward the mortgage are treated as a contribution to the property pool
• Agreement on interim payments is important — this is often part of the early mediation discussion, even before the full property settlement is resolved

How mediation resolves property sale disputes

Property settlement mediation is the fastest and most cost-effective way to resolve disputes about selling the family home or investment properties. In mediation, both parties can:

• Agree on whether the property will be sold or one party will keep it
• If selling: agree on timing, agent selection, listing price, and reserve
• If one party is keeping it: agree on the buyout amount, refinancing timeline, and offset against other assets
• Agree on how interim mortgage payments will be handled
• Agree on how net proceeds will be divided as part of the overall property settlement

An agreement reached in mediation is then formalised as consent orders — giving it the same legal force as any court order, including the power to compel both parties to sign transfer documents.

Frequently asked questions

Can I change the locks or refuse my ex access to the property?

Generally no — both parties retain rights of access to jointly owned property until a court order says otherwise. Changing the locks without agreement or court authority can expose you to legal liability and is likely to escalate conflict. If there is family violence or a safety concern, seek urgent legal advice and consider applying for a domestic violence order that includes exclusion from the property.

What if my ex-partner is damaging the property?

Deliberate damage to property after separation can be treated as dissipation of assets — the court has the power to notionally add back the value of assets that have been dissipated or wasted. Document any damage and take legal advice promptly.

Can the property be sold before the property settlement is finalised?

Yes — in fact, this is common. The property can be sold and the proceeds held in a solicitor's trust account pending finalisation of the property settlement. This avoids the mortgage continuing to accrue and preserves the asset value. The consent orders can specify how the proceeds are to be distributed when they issue.

What happens to the proceeds if one party has already left the home?

The proceeds are divided in accordance with the property settlement — not based on who has been living in the property. The party who moved out does not lose their share of the equity simply because they left. Occupancy arrangements during the period of separation may be a factor in the contributions analysis, but are not determinative.

Related guides

• property settlement in family law
• consent orders
• family mediation
• cost of divorce in Australia
• binding financial agreements

For property law and transfer duty exemptions, see your state Revenue Office. For the Family Law Act framework: Family Law Act 1975 (Part VIII). Court filing: Federal Circuit and Family Court of Australia.