It’s not uncommon that when faced with a separation, one party may try to sell or otherwise dispose of property in their sole name, much to the frustration of the other party. Issues often arise when the family home is in one party’s sole name and can include circumstances where property is transferred to other family members for ‘protection’ from a family law claim.
The purpose of section 106B of the Family Law Act is to prevent parties from attempting to defeat a claim by their former partner by disposing of property, hiding assets or engaging in other financial manoeuvres that would have the effect of reducing the pool of assets available for division. It can be relied on by both married and de facto separated couples.
Generally speaking, the Court is provided with powers to restrict future transactions and to undo transactions that have already been completed. To exercise the power, the Court must be satisfied that, among other things, an order was or would have been anticipated at the time of the transfer by a reasonable person and that the transfer defeats that anticipated order.
The power is discretionary and as such the Court would need to be convinced that it is fair to undo or restrict the transaction. As part of this consideration, the Court must consider the effect on any genuine third party who received the property.
If you have concerns about property being disposed of without your knowledge or agreement, we recommend you contact a member of our Separation, Family & Relationships team for advice.
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