Partition auction – not the best solution in a divorce
A divorce brings not only a host of emotional and legal problems for couples, but they also usually have to decide how to divide their shared assets. Unlike money, dividing real estate is often more complicated. If couples can't find a mutually agreeable solution, a forced sale may be the next step. However, this often comes with disadvantages for the owner.
It's common knowledge that couples must live separately for a year before they can get a divorce. Often, couples only address the division of assets after this period. However, if a couple realizes before the separation year is over that reconciliation is impossible, they can sell their shared property beforehand. This makes it easier to divide the proceeds, allowing both partners to plan their new beginnings or pay off any outstanding mortgage debts.
Once the separation year is over, one of the still-spouses can demand the sale of the property. Should the other partner refuse, they can even be sued to obtain their consent. However, this can be prevented with the help of a real estate professional, who can assist in weighing the competing interests.
If the couple decides that the property should later be passed on to their children, it could, for example, be rented out. The income could then be used to pay off the loan to the bank.
Of course, it's also possible for one partner to keep the property. However, the other partner must then be bought out. If the couple cannot agree on the buyout amount, a partition auction is often the likely outcome. A partition auction is a type of forced sale and can be initiated independently by either partner at the local court. Through a partition auction, indivisible assets are converted into divisible assets.
In most cases, a partition auction is a rather unfavorable solution, as the property is usually sold below market value. Many bargain hunters see this as an opportunity to acquire a new property. While the partner who wishes to remain in the property has the chance to purchase the other part cheaply by submitting the highest bid, they also run the risk of being outbid. This can drive the price of the property higher than the available budget, and the property ends up in the hands of a stranger. Furthermore, other additional costs arise. One should budget approximately €1,000 to €2,500 for an expert appraiser. Additional costs include notary fees and the overall legal process.
A professional real estate agent can help you avoid these costs. As a neutral party, they advise both sides and help find the best solution for the shared property.
Are you unsure what the best solution is for your property during the separation phase? Contact us! We'd be happy to advise you.
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https://de.wikipedia.org/wiki/Ehescheidung_(Deutschland)
https://de.wikipedia.org/wiki/Teilungsversteigerung
Legal notice: This article does not constitute tax or legal advice for any specific case. Please consult a lawyer and/or tax advisor to clarify the facts of your individual situation.
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About the author
Harry Mohr
Real estate agent (Chamber of Industry and Commerce)Harry Mohr, author of this article
