One of the most complex and emotionally charged aspects of a divorce is the division of the marital home. The question of who may continue to live in the property, how the value of the house is determined and what happens to any mortgage debt can cause considerable uncertainty. In this article, we discuss everything you need to know about the division of the marital home in a divorce, including the various options and what to look out for in order to make this process as smooth as possible.
What Should You Consider When Dividing the Marital Home?
Many factors come into play when dividing the marital home. Here are some important matters to consider:
1. Ownership of the Property
The first step in dividing the property is to determine who owns it. There are three possible situations:
- Community of property: If you married in community of property (before 1 January 2018), the home automatically belongs to both partners, regardless of who pays the mortgage. In this case, the property is divided 50/50 upon divorce.
- Limited community of property: For marriages entered into after 1 January 2018, the limited community of property applies. In this case, only property acquired during the marriage is jointly owned. If one of the partners already owned the property before the marriage, it remains outside the division.
- Prenuptial agreement: If you married under a prenuptial agreement, the arrangements laid down in the agreement apply. As a result, the property may belong to one partner, or specific arrangements may have been made regarding its division.
2. What Are the Options for Dividing the Property?
There are various ways in which the marital home can be divided. The choice depends on your specific situation and wishes. The three most common options are:
One of the partners remains in the property
If one of the partners wishes to remain in the property, that partner must buy out the other. This means the departing partner must be compensated for half of the equity in the property. It is important to consider whether the remaining partner can take over the mortgage and whether the bank agrees to this.The property is sold
If neither partner wishes to remain in the property, a decision may be made to sell it. The proceeds of the sale are then divided according to the ownership shares. Any equity or residual debt must also be divided fairly. This can be a good solution if there is a mortgage that neither party can bear independently.The property is temporarily let
In some cases, it may be an option to let the property temporarily. This often occurs when the housing market is unfavourable and an immediate sale would not be advantageous. This solution can provide time to reach a final decision.
3. How Is the Value of the Property Determined?
In a divorce, the value of the marital home must be established to enable a fair division. The value of the property can be determined in several ways:
- Valuation by an independent surveyor: This is the most reliable way to establish the value of the property. An independent surveyor determines the market value of the property based on the current housing market and the condition of the property.
- Written valuation by an estate agent: In some cases, an estate agent can prepare a valuation. This is often cheaper than an official appraisal, but may be less accurate.
- Joint valuation: If both partners agree on the value of the property, they can determine a value themselves. This can, for example, be based on recent sale prices of comparable properties in the neighbourhood.
4. What Happens to the Mortgage Upon Divorce?
The mortgage is often a key point of discussion when dividing the property. Various scenarios are possible:
- Takeover of the mortgage by one of the partners: If one of the partners wishes to remain in the property, he or she can attempt to take over the mortgage. This means the departing partner must be released from joint and several liability for the mortgage. This is only possible if the bank agrees and the remaining partner is financially able to bear the mortgage independently.
- The mortgage remains in both names: In some cases, the mortgage remains in both names, even though only one partner lives in the property. This can be a temporary solution, but it may entail financial risks for the departing partner.
- Sale of the property and repayment of the mortgage: If the property is sold, the mortgage is usually repaid in full from the sale proceeds. Any equity is divided between both partners, and in the event of residual debt, both partners must make an arrangement to settle it.
5. Equity or Residual Debt
When dividing the property, there may be equity or residual debt. These are important financial matters that must be resolved fairly:
- Equity: If the property is worth more than the outstanding mortgage upon sale, there is equity. This equity must be divided according to the ownership shares. This means each partner is entitled to a portion of the equity.
- Residual debt: If the property is worth less than the outstanding mortgage, there is residual debt. Both partners are in principle responsible for this debt, unless other arrangements have been made in the prenuptial agreement.
6. Who Pays the Housing Costs During the Divorce Proceedings?
During the divorce, the costs of the marital home continue, such as mortgage payments, energy costs and any maintenance costs. The allocation of these costs can often cause conflict, particularly when one partner remains in the property and the other has already left. In most cases, both partners remain responsible for the costs until the property has been officially divided. It is important to make clear arrangements about this, for example in a provisional agreement.
7. Tax Consequences of the Division of the Property
A divorce also has tax consequences, particularly regarding the owner-occupied home and mortgage interest deduction. The partner who remains in the property can only continue to deduct the mortgage interest if he or she bears the full mortgage costs and the former partner is no longer an owner of the property. In addition, you must take into account the tax rules regarding the equity of the property, which may affect any future deduction possibilities.
Frequently Asked Questions About the Division of the Marital Home
Can I remain in the property after the divorce?
Yes, you can remain in the property if you are financially able to take over the mortgage and buy out the other partner. However, this must be approved by the mortgage lender.What if we cannot agree on the division of the property?
If you cannot reach agreement, the court can make a decision on the division of the property. This often happens when there are disputes about the value of the property, the amount of the buyout sum or the allocation of the mortgage debt.What happens to the property if we have a rental home?
If you share a rented property, a decision must be made as to who may remain in the property. In principle, the tenant in whose name the rental property is registered may remain, but the court may decide otherwise if children are involved or if one of the partners has a greater need for the property.When must the property be sold?
The property must be sold if neither partner can or wishes to take over the property. A sale may also be necessary if the bank does not agree to one of the partners taking over the mortgage.
Why Engage Arslan Advocaten for the Division of Your Marital Home?
At Arslan Advocaten, we understand that the division of the marital home during a divorce can be an emotionally and legally complex process. Our lawyers specialise in family law and have extensive experience in guiding clients through the divorce process. We help you handle the division of the property in a fair and legally correct manner, so that you can move on with your life.
Would you like to know more about the division of the marital home or do you have questions about your situation? Contact us today for a no-obligation consultation.