Have you recently separated and are going through property settlement? Do you have real estate?
Did you know that you are not required to pay stamp duty if you are transferring property between former spouses as a part of your property settlement? In order to qualify for the exemption, you must document your property settlement by way of either:
- A Financial Agreement; or
- Consent Orders.
There are some differences between a Financial Agreement and Consent Orders.
Financial Agreements
For a Financial Agreement each party must be provided with independent legal advice before signing the agreement about:
- the effect of the agreement on the rights of that party; and
- the advantages and disadvantages at the time that the advice was provided, to that party of making the agreement.
Before or after the agreement is signed, each party must be provided with a signed statement by the legal practitioner stating the advice was given.
A financial agreement can deal with property, financial resources and/or spousal maintenance of the parties or matters incidental or ancillary to these matters. A financial agreement can cover and extinguish any future claims for maintenance but cannot cover parenting matters. It can be entered into between parties to a marriage, a former marriage or who are contemplating marriage or between parties in a de facto relationship, contemplating a de facto relationship or whose de facto relationship has broken down. The agreement need not be just and equitable. It is not registered anywhere and does not need to be approved by a Court.
Consent Orders
Consent Orders, on the other hand, need to be signed by both parties but not necessarily a Solicitor. Parties can only enter into these Orders when a relationship has broken down and the orders must be filed with and get approved by the Court. The Court will only make the Orders if they consider it to be just and equitable. They do not deal with spousal maintenance but can deal with parenting matters as well as property.
How we can help
If you have decided to separate, do not maintain the misconception that you can sort things out by drafting up a simple document between yourselves. A document that is not legally binding could have no value. We recommend that you document your property settlement agreement by way of a financial agreement or consent orders to ensure it is legally binding and recognised at law. This will also have the added benefit of providing you with an exemption from payment of stamp duty.
Shweta Kumar is a family lawyer with Adams & Partners Lawyers.