When couples divorce and own a property together, the big question arises: What happens to it now? The answer isn't always simple and depends on many factors. Does the couple have children? Does one partner want to remain living in the property? And what is the ownership share of the property for each partner?
To give an overview of all the possibilities, let's assume, for the sake of simplicity, a divorce case in which the couple bought the house together and owns it equally. Let's call this couple Mr. and Mrs. Meier. They didn't have a prenuptial agreement and, like most couples, hadn't anticipated a divorce. They also have two children who will live with Mrs. Meier after the separation. The question is, where? The couple isn't sure what to do with the house. A real estate expert presents them with the following options:
Ms. Meier will continue to live in the property with her children. It remains jointly owned by both of them.
The two agree on whether Ms. Meier must pay Mr. Meier rent, whether she can remain living in the house without further payments, or whether the rent payments can be offset against the mortgage costs or maintenance expenses. To ensure that neither partner is disadvantaged, it is advisable to seek legal counsel.
Mrs. Meier stays in the property with the children and pays Mr. Meier out.
If Ms. Meier wants to remain in the house with the children, she can alternatively buy out her soon-to-be ex-husband during the divorce proceedings. For this, the property's value is offset against the outstanding debt, meaning the mortgages and loans that still need to be paid off. In the Meiers' case, the house is worth €300,000. They bought the house 10 years ago and still have €200,000 to pay off. This €200,000 would be paid solely by Ms. Meier in the future. Since €100,000 of the house's value has already been paid off, she would also have to pay Mr. Meier €50,000. This option is only practical if the partner remaining in the house can afford to repay the loan on their own.
The house will be transferred to the children as a preliminary inheritance or gift. Mrs. Meier will continue to live there with the children until further notice.
If Ms. Meier remains living in the house, there is another way to clarify the ownership situation: The property can be transferred to the couple's children either as a preliminary inheritance or as a gift, with Ms. Meier continuing to live there for the time being. As the children's guardian, she can dispose of the house until they reach the age of 18. However, this alternative is more suitable for families with only one child, as disputes could arise later if there are siblings.
Mr. and Mrs. Meier divide the house into two apartments, each keeping one.
Dividing an apartment is a good option if both partners still get along well and can generally imagine living near each other. However, the division cannot be carried out without approval from the municipality. Furthermore, it must be registered in the land register.
Mr. and Mrs. Meier keep the house and rent it out. The rental income is split.
If both partners want to move out of the house, they also have the option of renting it out and sharing the income. This option is particularly interesting, for example, if one of their children wants to live in the house later.
Mr. and Mrs. Meier sell the house together and share the proceeds.
Besides the option of one partner remaining in the property and buying out the other, selling the property is one of the most popular solutions in divorce proceedings. Both parties receive half of the proceeds. It is important that the couple seeks expert advice and has the property appraised before selling. Ultimately, the proceeds from the sale should provide both of them with the foundation for a fresh start.
Mr. and Mrs. Meier cannot reach an agreement, and a partition auction takes place.
When couples can't reach an agreement, a forced sale is often the only remaining option. This must be requested by one partner at the local court. However, this usually yields a lower price compared to a sale. Fortunately, the Meiers were able to reach an agreement without going to court and decided to sell the house together.
Are you getting divorced and unsure which option is right for your individual situation? Contact us now. We'd be happy to advise you.
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