The Ex Files: We’re getting divorced. Can I stay in the granny flat on our property?

Q: I think my wife and I are on the brink of separation. We have three young children together. If we separated, I think my wife would stay in the home with our children as she only works part-time so she can be home for the children. I cannot stand the idea of being away from them. We have a minor dwelling on the property that we rent out as an Airbnb. If we separate, do we have to sell the home or could I move in there until the children are older? Could my wife force me to move out?

A: One of the biggest challenges for any recently separated parent is getting used to not having their children around all the time. This is especially difficult with young children who thrive on routine and certainty.

Do you have to sell the home?

If your marriage ends, you will need to divide your relationship property between you and your wife. For most people, the family home is their largest asset and makes up most of the relationship property pool. Whether you can retain the home or must sell will depend on your financial circumstances.

If there are other significant assets in the property pool, it may be possible for one party to buy out the other’s interest in the property by compensating them with other relationship property. However, if the equity in the home accounts for most of the relationship property pool, you may have to sell the home and divide the proceeds of sale so you can both find somewhere to live.

If neither of you can afford to buy the other out, you could consider a property-sharing agreement. This would allow your wife to live in the home for a certain number of years before you sell it or are bought out. The agreement would specify who was responsible for the outgoings and maintenance on the home.

In New Zealand, it is common for the family home to be owned by a family trust established by one or both of the parties. This complicates the situation as trust property is not considered to be relationship property. The trustees would need to make decisions about how the trust property is dealt with. The trustees would have to consider what is in the best interest of the beneficiaries of the trust and comply with the trust deed.

Could you move into the minor dwelling?

Sometimes parties agree to not sell the home for a few years to allow the children to stay in the home until they are a bit older. A divorce creates a lot of uncertainty for children. Remaining in the home provides some stability while they adjust to the change.

You and your wife could agree that you move into the minor dwelling for a specified length of time, after which you will either sell the home or she will buy out your interest. This would allow you to remain close to the children. Whether this arrangement is successful would depend on how amicable your separation is. If you do not get along well, it may be best for the children that you live further apart.

Continuing to live together on the same property goes against the principle of a “clean break”, which governs relationship property law. However, it is up to you what arrangement you decide on together.

Can your wife force you to move out?

If you and your wife cannot agree on living arrangements after separation, one of you could make an application to the Family Court for an occupation order. An occupation order would grant one of you exclusive occupation of the home for a period that they think is appropriate in your circumstances. Generally, these are only granted as short-term solutions. The Court would consider several factors, including what is in the best interests of your children. An occupation order is often sought in conjunction with a protection order if there is evidence of family violence.

Another option if you cannot agree is to apply for an application to sell the home. Under the Property (Relationships) Act 1976, the Family Court can make an interim or final order for sale of any relationship property and give directions on how the sale proceeds should be dealt with. This application is usually sought when one party refuses to leave the home but the other cannot afford to rent or buy elsewhere without claiming their interest in the home. As your children are young, the court would be less willing to grant an order to sell the home in the short term.

Reaching an agreement early

If you separate, you will need to reach an agreement about the division of your relationship property. However, you are also entitled to make an agreement during your relationship about how you would divide your property if you were to separate. In this agreement, you can specify what property you would each retain, for example, who would keep special art, how bank accounts would be divided and who keeps the family pet. You could also reach an agreement about living arrangements after separation.

By having these conversations and reaching an agreement now, you can be clear about what would happen if you separated. It is often easier to compromise and reach an agreement while you are still on good terms. Separation is an emotional time. These emotions can often cloud people’s judgement. Making an agreement while you are still together can avoid some of these challenges. A quick settlement after separation will reduce your legal fees. It can also reduce the amount of conflict the children witness between you and your wife.

For the agreement to be enforceable after you separate, you would both need to seek independent advice from lawyers. These lawyers would advise you of your legal entitlements and certify the agreement.

Dispute resolution services

If you and your wife separate, neither of you need to rush off to court to resolve matters. There are many dispute resolution options open to you before going to court. Most people will have to show they have attempted to reach a resolution using one of these services before they can apply to court.

You and your wife can either reach an agreement between yourselves, negotiate through lawyers, or attend mediation. The Ministry of Justice website has useful information on what mediation is, when it may be appropriate and how to find a mediator. You can read more here.

Summary

If you separate from your wife, it is possible that you could live in the minor dwelling on your property. This would normally only be a short-term solution. This arrangement works best if the separation is amicable and where you both want to give the children more time in the home before you sell it. However, it will only work if you can agree. If you do not agree, your wife could apply to the Family Court for an occupation order which would give her exclusive use of the home. You can have open and frank conversations while you are still together and try to reach an agreement about what will happen to your property if you do separate.

Jeremy Sutton is a senior family lawyer, specialising in divorce cases where there are significant assets, including family trusts and complex business structures.

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