Real estate in divorce: These are your options

When couples get divorced and own a property together, the big question is: what happens to it now? The answer is not always easy and depends on many factors. Does the couple have children, does one partner want to stay in the property and what proportion of the property belongs to which 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 both own it equally. Let's call this couple Mr. and Mrs. Meier. They have not signed a prenuptial agreement and, like most couples, did not expect to divorce. They also have two children who will live with Mrs. Meier after the separation. But where - that is the question here. The couple are not sure what to do with the house. A real estate expert gives them the following options:

Mrs. Meier remains living in the property with the children. It continues to belong to both of them.

The two agree on whether Mrs. Meier has to pay rent to Mr. Meier, whether she can stay in the house without making any further payments or whether the rent payments can be offset against the costs of the house mortgage or the maintenance costs. To ensure that neither partner is disadvantaged, it is also advisable to seek legal support here.

Mrs. Meier stays in the property with the children and pays off Mr. Meier.

If Mrs. Meier wants to stay in the house with the children, she can alternatively pay off her husband upon divorce. In this case, the value of the property is offset against the remaining debt, i.e. the mortgages and loans that still need to be paid off. In the Meiers' case, the house is worth 300,000 euros, they bought it 10 years ago and still have 200,000 euros to pay off. These 200,000 euros would be paid by Mrs. Meier alone in the future. As 100,000 euros of the house has already been paid off, she must also pay 50,000 euros to Mr. Meier. This option is only practicable if the partner remaining in the house can also afford to repay the loan alone.

The house is transferred to the children as a prior inheritance or gift. Mrs. Meier remains living there with the children until further notice.

If Mrs. Meier remains living in the house, there is another way to clarify the ownership structure: The property can be transferred to the couple's children either as a prior heir or as a gift, with whom Mrs. Meier will remain living in the property 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. This is because siblings could cause disputes later on.

Mr. and Mrs. Meier divide the house into two apartments, each of which they keep one.

Sharing a home is an interesting option if both partners still get on well and can imagine living near each other. However, the division cannot be carried out without the approval of the local authority. It must also be entered in the land register.

Mr. and Mrs. Meier keep the house and rent it out. The rental income is shared.

If both partners want to move out of the house, there is also the option of renting out the house and sharing the income. This option is interesting, for example, if one of the children wants to live in the house later on.

Mr. and Mrs. Meier sell the house together and split the proceeds.

In addition to the option of one of the partners staying in the property and paying out the other partner, the sale is one of the most popular options in divorce proceedings. Both parties receive half of the proceeds. It is important that the couple seek expert advice and an estimate of the property value before selling. After all, the proceeds from the sale should be the basis for a new start for both parties.  

Mr. and Mrs. Meier cannot reach an agreement and a partition auction is held.

If couples are unable to reach an agreement, the only option is often a partition auction. This must be applied for by one of the partners at the local court. Compared to a sale, however, the proceeds are usually lower. Fortunately, the Meiers are able to reach an agreement without going to court and decide to sell the house together.

Are you getting divorced and don't know which of the options is right for your individual situation? Contact us now. We will be happy to advise you.

Photo: jack191