Why Informal Agreements Are a Risky Shortcut
They Can’t Be Enforced
An informal agreement might feel solid at the time—you trust each other, you’ve both agreed, and things seem fair. But people and circumstances change. Perhaps one person loses their job, meets someone new, or decides they want more from the arrangement. Without court orders, there’s no legal way to enforce the property settlement.
Real-life scenario: Sarah and Tom agreed that Tom would buy Sarah out of their shared home within six months of separation. At first, Tom was cooperative. But as property values rose, he delayed the payment, then ultimately refused to proceed. Because they had no court orders or binding agreement, Sarah had no legal leverage to enforce what they had agreed.
The Future Is Still Up for Grabs
Separating does not automatically sever your financial ties. Unless your property settlement is legally finalised, your former partner can make a fresh claim against you years later—even after you’ve built a new life or bought a new home. This often happens when one party sees the other doing financially well and reconsiders the past arrangement.
Real-life scenario: Jake and Emma separated five years ago. They had an informal agreement and never revisited it. Jake recently bought a new property with his partner. When Emma found out, she felt she hadn’t received a fair share previously and made a legal claim on Jake’s new property. The court accepted it, as there was no formalised property settlement.
Time Limits Are Ticking
Time limits exist for a reason. They provide structure to the process, but missing them adds complexity. Married couples have 12 months from the date of divorce; de facto couples have two years from separation. Life gets busy, and it’s easy to think “we’ll sort that later,” but later can become too late.
Real-life scenario: Alex and Lily divorced but delayed finalising property matters. At month 15, Alex wanted to claim their share of assets. But the time limit had expired. They had to apply for court permission, which was stressful, costly, and not guaranteed.
Superannuation? Not Without Formal Orders or a Binding Agreement
Superannuation is one of the most overlooked areas in informal agreements. Many couples agree verbally to divide super, unaware that without formal orders or a Binding Financial Agreement, it’s legally inaccessible. Super funds will simply not act on informal decisions.
Real-life scenario: Martin promised Zoe that she would receive 40% of his superannuation as part of their verbal settlement. When Zoe tried to access her entitlement, the fund rejected her request. They needed a court order, which they never had. She missed out entirely.
Debts Stick Around
Informal agreements often forget joint liabilities. Just because you agree to transfer a loan or mortgage responsibility doesn’t mean the lender agrees. Without court orders or refinancing, both names remain on debts—and either party can be pursued if things go wrong.
Real-life scenario: Mia moved out and agreed James would keep the house and pay the mortgage. Two years later, James fell behind on repayments. The bank pursued Mia for the outstanding debt because her name was still on the loan.
Tax and Stamp Duty Can Bite
Tax rules provide exemptions for property transfers between separating couples, but only if supported by formal court orders or binding agreements. Without them, thousands of dollars can be lost to stamp duty and capital gains tax—an unnecessary hit at an already difficult time.
Real-life scenario: Nadia transferred her share of the home to her former husband Chris. They never formalised it. When the transfer was processed, they were charged over $7,000 in stamp duty that could have been avoided.
Why Enforcement Matters
Even the most amicable separations can go off-track. Agreements made with the best of intentions can fall apart when emotions flare, financial pressure builds, or new relationships form. Without enforceable court orders or a binding agreement, there is no straightforward way to hold someone accountable.
Real-life scenario: Leo and Jade agreed to sell their investment property and split the proceeds. After the market rose, Jade refused to sell, hoping to gain a bigger share later. Leo had no way to enforce their original deal without formal orders.
