
Divorce property: When the mortgage has not yet been paid off
First of all, it is important to clarify who is legally liable for the loan. As a rule, both spouses are jointly and severally liable for the loan if both have signed the loan agreement. This means that the bank can demand full repayment from either partner, regardless of who remains living in the house or who is listed in the land register.
Seek professional assistance
Divorce is not only emotionally challenging, but also difficult to organize. A real estate agent can help you find the best solution for your property.
Possible options for the property and the loan
- Sale of the property
Selling the property is often the simplest solution, especially if neither partner wants to or can keep the property on their own. The proceeds from the sale are used to pay off the remaining loan. Any surplus can be divided between the parties.
Have the property professionally appraised to obtain a realistic sale price. Before selling, also clarify with the bank whether an early repayment penalty will be incurred if the loan is repaid prematurely.
- takeover of the property by a partner
If one of the partners wants to remain in the property, they can pay out the other partner and take over the loan. However, this requires the consent of the bank, which will check the creditworthiness of the remaining partner.
The partner who wishes to remain in the property should check whether they are financially able to bear the loan alone. They should also negotiate with the bank about rescheduling or adjusting the loan agreement.
- Renting out the property
If a sale or takeover is not possible, the property can be rented out to cover the loan installments. However, this requires an agreement between the former partners on how to handle the income and running costs.
A clear contract should be drawn up regarding the distribution of rental income and responsibility for repairs or other expenses. Possible tax implications of renting out the property should also be taken into account.
- Foreclosure
If it is foreseeable that no agreement can be reached and the loan installments cannot be paid, foreclosure is imminent. However, this should be considered a last resort, as the sale proceeds are often significantly below market value.
Consider tax implications
In the event of a divorce, there are also tax aspects that you should consider, especially when it comes to selling or renting out the property. Consult a tax advisor to avoid unpleasant surprises.
Conclusion
If the mortgage has not yet been paid off, the situation requires clear communication and careful planning. Whether selling, transferring, or renting out the property, each option has advantages and disadvantages that must be weighed up individually. With the right advice and professional support, you can find a solution that secures your financial and personal future.
Are you looking for support in finding the best solution for your divorce property? Contact us! We will be happy to advise you.
Notes:
For reasons of better readability, the generic masculine form is used in this text. Female and other gender identities are expressly included insofar as this is necessary for the statement.
Legal notice: This article does not constitute tax or legal advice in individual cases. Please have the facts of your specific case clarified by a lawyer and/or tax advisor.
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