Divorce is usually accompanied by strong emotions, especially when there are children. But the distribution of property, especially if there is a shared property, almost always means an enormous effort. As you may already know, dividing up real estate is particularly complicated because real estate, as its name suggests, is immovable. It becomes even more difficult when two parties are wrestling or, in the worst case, arguing over these immovable values. Then good advice is sometimes expensive. And that's exactly why we would like to provide you with some explanations and tips on this topic.
The community of gains and the equalization of gains
Spouses are - as long as something else such as the separation of property has not been agreed - by law a community of profits. In the case of a divorce, this results in a so-called gain adjustment, if the financial gain of one spouse exceeds the gain of the other spouse. Sounds complicated? Isn't it necessarily: The profit sharing ensures that both spouses get financial compensation for everything that was unevenly acquired in wealth during the marriage - using a key that is quite complex and the details of which would go beyond the scope here. A property can therefore be both a gain for a spouse and a compensation item in the course of a gain adjustment. And here, as already described, things get complicated: real estate is immovable. And that's why they often first have to be converted into money in order to be really distributable and usable as compensation.
Selling real estate in the event of a divorce - does it have to be?
Sometimes, unfortunately, yes. The most important reason is often the economic separation of the community. Those who get divorced usually want a real separation. Spatially, emotionally, financially. If the house or apartment is not sold, all decisions regarding the property must continue to be made by both parties. That means financial and personal closeness. It is also possible that the joint property cannot be financed for one party alone or that this party, who would like to keep the property, cannot pay off the other party. Another reason: if you live alone, you need less space. Sometimes a house is just too big to live in alone - not to mention the running costs.
Usually (and unfortunately) the most common reason for the (often not voluntary) sale of a house is that the parties simply cannot or do not generally agree on what should happen to a property in the event of a divorce. Divorce often means a stressful and nerve-wracking history and the willingness to compromise and productive discussions is rather low. As a result, neither party receives their financial share, the separation is delayed and the running costs for the property continue to be incurred for both parties, although they have long since concluded the joint chapter. Then it comes to the mostly less profitable division auction.
In short, selling real estate in the event of divorce makes sense in the vast majority of cases. Which way to choose for this, however, is a completely different question.
Selling real estate in the event of divorce - what are the options?
The division auction (a type of foreclosure auction or forced sale) is the last option and should be avoided if possible. We'll briefly introduce them later. The alternatives are milder and often the better compromise.
The classic house sale
Very often - and quite rightly - married couples decide to sell the property they share and then distribute the proceeds fairly among themselves. Existing loans must be repaid in advance and a prepayment penalty may have to be paid to the bank, but then the way is clear. Short and painless and if you do the early house sale tackle it and not implement it in the short term and in panic, mostly profitable.
Payoff from the other spouse
Would you like to keep the house, but your spouse doesn't? Then just pay him or her off and acquire the ownership share! For this, on the one hand, the value of the property must be determined, and on the other hand, the bank must give its consent if there are still liabilities. After all, it is the bank that has to release the partner who has been paid out from joint liability. No payment will be made without the consent of the bank!
An often cost-intensive undertaking and more of a remodeling than selling real estate in the event of divorce is the so-called real division. If technically and legally possible, a house is converted into two structurally separate residential units. Each spouse then receives half and can do whatever he or she wants with it: rent, sell, live there yourself. Also consider here: If there are still obligations to the bank, an agreement with them is absolutely necessary.
Transmission to common children
Not a sale, but a gift. All rights are transferred to the child or children. And with it all duties. And this is often where the problem lies: the emotionally valuable house remains “in the family” without the parents having to argue about it, but the child is burdened. Especially in the future when property taxes, repairs, maintenance costs and more are incurred. If the children are grown up and financially independent, this step is a good option. In the case of very young adults or even minors (these require the consent of the Guardianship Court for the donation), we advise against it. By the way: If the children are liquid, the property can also be sold to the children. So the house stays in the family and the parents still receive the money they are entitled to.
declaration of division
It is only possible if you own an apartment that consists of several residential units (e.g. an apartment building): The spouses agree and each spouse receives sole ownership of certain apartments.
If the spouses cannot agree on how to deal with a shared property, this is often the last step. A spouse applies for the division auction to the responsible local court and thus initiates the (forced) public auction of the property. With the result that foreclosed houses usually achieve lower prices than those regularly sold. But also with the advantage that a possibly deadlocked Rose War can still be ended. The subject of division auction (or forced sale) in the event of divorce is a very complex subject, please contact us if you have detailed questions.
Real estate loan in the event of divorce
Would you like to sell a house in the course of a divorce? Then don't overlook the important issues of credit and land charges. Here is the most important information:
If the loan agreement was signed by both spouses, both are liable. If only one spouse has signed the loan agreement, only he or she is liable. In short: divorce or separation does not change the liability for a loan.
Land register entry
This is not affected by separation or divorce! The same applies of course to the land charge. The land charge protects the bank: If the borrower becomes insolvent, the land charge secures the bank's right to sell the house, for example by means of a foreclosure auction, in order to use the money received to settle the loan.
One last word: the marriage contract
A marriage contract may seem unromantic. But it is much more pragmatic than many a war of the roses at the end of a failed marriage. If a married couple draws up an expertly supervised marriage contract, they ensure clear relationships. Especially in the hopefully never-occurring event that the marriage fails. Whether separation of property, rules on severance pay and much more: With a marriage contract you can determine individually and very precisely how assets (monetary values and immovable assets) should be dealt with later in an emergency.