The family home is the biggest financial issue in many divorces. The house often represents the largest asset and is emotionally charged at the same time. In this article, we discuss the different options for dividing your property in divorce and the legal aspects you need to consider.
The legal basis: community of property or prenuptial agreement
How your property is divided depends primarily on your matrimonial property regime. If you married under community of property (article 1:94 BW), the home is joint property and both partners are entitled to half its value. Since January 1, 2018, the limited community of property applies: only assets acquired during the marriage fall within the community. A home you owned before the marriage remains private property unless otherwise agreed. With a prenuptial agreement, the division depends on what you agreed upon in the agreement.
Option 1: Selling the property
The most straightforward option is selling the joint property. The equity (sale proceeds minus mortgage debt and selling costs) is divided according to the ownership ratio. If you both own 50%, you each receive half the equity. With negative equity, the same principle applies: both partners are responsible for their share of the remaining debt. Keep in mind that selling takes time and that you need to make arrangements about who stays in the property and who pays the mortgage during this period.
Option 2: One partner takes over the property
One partner can choose to buy out the other. This means the acquiring partner compensates the other for their share of the equity and takes over the entire mortgage in their own name. The bank must agree: you need to demonstrate that you can bear the mortgage costs alone. Additionally, the notary must record the transfer and release the other partner from joint liability for the mortgage. The costs for this (notary, valuation, possible refinancing) are usually borne by the acquiring partner.
Option 3: Keeping the property temporarily
Sometimes ex-partners choose not to divide the property immediately, for example because the housing market is unfavorable or for the sake of the children. This can be done for a maximum of 3 years after the divorce, after which the property must still be divided. It is crucial to make clear arrangements about who lives in the property, who pays the mortgage, and how maintenance costs are divided. Document these arrangements in a written agreement, preferably drafted by a lawyer.
The mortgage in divorce
In divorce, you not only need to divide the property but also handle the mortgage. As long as both names are on the mortgage deed, you are both jointly and severally liable for the full debt, even if only one partner lives in the property. It is therefore essential to transfer the mortgage to one name as soon as possible or pay it off upon sale. Contact your mortgage provider to discuss the options. Also remember that the mortgage interest deduction may change after divorce: only the partner who lives in the property and pays the interest can claim the deduction.
Advice from a specialized attorney
Dividing the property in divorce is complex and has significant financial consequences. It is strongly recommended to be assisted by a specialized family law attorney who can advise you on the best strategy, negotiate with your ex-partner, and ensure your interests are protected. At Advocaat bij Scheiden, we have extensive experience with property division in divorce and are happy to assist you with expert advice.