Living happily together in your own four walls is part of the ideal of a life together as spouses. This is why buying or building a home of one's own as an investment with a stable value becomes part of the joint wealth accumulation for many couples.
However, personal circumstances and plans may change and the couple may decide to go their separate ways. In the following, we would like to give you an overview of what can be done with the property in the event of a divorce.
The importance of premarital decisions
At the time of the civil marriage, the decision is made as to how the couple wish to deal with their personal and joint assets in the future. It is possible to determine a community of property, separation of property or a community of accrued gains. In order to define a customised division of assets, a marriage contract can be concluded. This can prevent disputes in the event of an emergency, but it is not often chosen as a rather unromantic approach.
Anyone who enters into a marriage without contractual arrangements lives from then on in a community of accrued gains. The individual can therefore decide freely about their assets and in the event of divorce, a so-called equalisation of gains takes place, which is clearly regulated by the German Civil Code in marriage law. In most cases, this also concerns the division of the property. The assets gained during the marriage are compared and whoever has acquired the larger sum must pay half of the difference to their partner as compensation.
The home in the community of accrued gains
The equalisation of accrued gains refers exclusively to a monetary claim and does not include any tangible assets, meaning that the asset value of the property must be divided. This rule applies regardless of whether one or both spouses are registered as owners in the land register. Both have a half claim.
There are various options for how this claim is implemented in practice and how the property is dealt with. As a general rule, an objective and amicable decision is always preferable to an emotionally charged one. The latter often leads to financial losses on both sides due to pressure to sell and additional court and legal costs.
Transfer and payment
It is possible to transfer the home in its entirety to one of the partners by notarisation as part of the separation. This partner is now obliged to pay the other partner their share of the property. If financing is still in place, the bank's consent is required and the spouse must be released from the joint and several loan debt.
This solution is ideal if one spouse wishes to continue living in the house with their children. However, realisation often fails due to lack of financial resources.
Real division of a property
Another option is the so-called real division, in which the existing property is converted into two separately habitable residential units and both parties can continue to live there. The respective residential unit could be sold or rented out.
As this real division can only be realised from a certain property size and under special structural conditions, it is rarely used.
Letting the property
If both spouses wish to move out but keep the house, a joint letting can be considered. It should be borne in mind that this option still entails joint decisions and obligations as landlords and requires good co-operation.
The advantage here: The rental income could allow the outstanding loan instalments to continue to be repaid and early repayment penalties to the bank could be avoided.
Sale of the house
Experience shows that, in addition to transferring the property to one of the spouses, selling it is the most frequently chosen solution. The equalisation of accrued gains and any outstanding loans can be settled, allowing both spouses to make a clean break and, with the often remaining balance, a confident new start.
Partition auction - if an amicable settlement is not possible
A partition auction is arranged if no amicable solution can be found. It can also take place against the will of one of the spouses, generates additional costs for experts and courts and often significantly reduces the profit, as the property rarely realises its actual value.
How to proceed if the property was brought into the marriage
If one of the spouses already owned a property before the marriage within the framework of the community of accrued gains, this is added to their initial assets and is not included in the accrued gains and their equalisation. The same rule applies to an inheritance or gift during the marriage.
In contrast, a certified increase in value during the marriage, regardless of its origin, must be taken into account in the gain. If this is significant, it can, in the worst case, lead to the property having to be sold in order to settle the equalisation of gains claim.
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