During a divorce, both partners often remain responsible for paying the fixed costs, such as the mortgage or rent, until definitive arrangements have been made. This can lead to uncertainty and financial tensions, especially when one of the partners leaves the home. Whether it concerns a property you own or a rental property: it is important to know who must pay which costs during a divorce and what options are available to make clear arrangements.
In this comprehensive article, we explain how payment obligations are regulated for owner-occupied and rental properties, what the consequences are for the mortgage, how mortgage interest deduction after a divorce works, what role the National Mortgage Guarantee (NHG) can play, and when the court can intervene. This way, you know exactly where you stand.
Why fixed costs during a divorce often lead to problems
During a divorce, the living situation often changes faster than the financial and legal arrangements. It regularly occurs that one of the partners continues to live in the property, while the other seeks accommodation elsewhere. Yet many obligations remain in place for the time being. As long as no definitive arrangements have been documented and executed, both partners often remain jointly and severally liable for fixed costs such as the mortgage or rent.
This means that a payment arrears can have significant consequences for both ex-partners. This is precisely why it is essential to make good arrangements in a timely manner and to document these legally.
1. Owner-occupied property during a divorce
If you jointly own a property, you are both in principle responsible for the mortgage as long as the property has not been definitively divided. This also applies if one of you has already left the property. There are broadly three options for dealing with the owner-occupied property during and after the divorce.
Option 1: Selling the property
You can decide to sell the property. The proceeds are then divided, or, if the property is in negative equity, any residual debt is settled. Until the sale is definitively completed, both partners remain responsible for paying the mortgage costs.
Selling the property can provide peace of mind, but also brings uncertainties, especially in a fluctuating housing market.
Residual debt and the National Mortgage Guarantee (NHG)
When selling the property after a divorce, a residual debt may arise. If you have a mortgage with the National Mortgage Guarantee (NHG), the NHG can in certain cases offer protection against this residual debt.
It is important to know that the NHG does not automatically write off every residual debt. The sale of the property must be necessary due to the divorce. This means:
- The residual debt can be written off if neither partner can independently continue the mortgage.
- If one of the partners can bear the mortgage alone, but you still choose to sell, the NHG does not always regard this as a necessary sale.
In the latter case, you remain personally responsible for repaying the residual debt, even though the mortgage falls under the NHG. It is therefore advisable to have a thorough assessment beforehand of whether NHG write-off is possible in your situation.
More information about the NHG can be found on the official website: National Mortgage Guarantee.
Option 2: Taking over the property (buying out)
Another option is for one of the partners to take over the property. This means that this partner buys out the other and the property is transferred entirely to his or her name. The partner who remains then becomes fully responsible for the mortgage.
As long as the buyout and transfer at the bank and notary have not been completed, both partners remain legally liable for the mortgage. It is therefore important to complete this procedure as quickly as possible.
Mortgage conditions when taking over the loan portion
Many people assume that the mortgage conditions automatically remain the same when one partner takes over the other's loan portion. This is not always the case. The current mortgage rules at the time of the takeover often apply to the assumed loan portion.
This may mean that:
- the assumed loan portion must be repaid on an annuity or linear basis;
- the monthly costs increase compared to the previous situation;
- the tax treatment changes.
Therefore, always discuss this in advance with the bank or mortgage adviser. The bank will also assess whether the remaining partner can independently bear the mortgage costs.
Option 3: Temporary arrangements during the divorce
In many cases, temporary arrangements are made during the divorce proceedings about who pays the mortgage. For example, when one of the partners continues to live in the property. These arrangements can be documented in a provisional regulation or in the divorce settlement agreement.
Please note: temporary arrangements do not change the joint and several liability towards the bank. If payments are not made, the bank can hold both partners liable.
Mortgage interest deduction after a divorce
The question of who is entitled to mortgage interest deduction after a divorce regularly causes confusion. The rules are strict and include an important transitional arrangement.
Mortgage interest deduction during the transitional period
For up to two years after the separation, both ex-partners may deduct their share of the mortgage interest, provided that:
- the mortgage is still in both names;
- the relevant partner actually contributes to the payment of the mortgage interest.
This arrangement provides temporary financial relief, but is not unlimited.
After two years: what changes?
After the two-year period expires, the departed partner loses the right to mortgage interest deduction, unless the property has in the meantime been fully transferred to the name of the remaining partner. To prevent tax problems, it is therefore important to arrange the definitive division within this period.
More information about mortgage interest deduction can be found at the Tax and Customs Administration.
Benefiting from a lower mortgage interest rate after the divorce
The partner who purchases a new property after the divorce can often benefit from the current mortgage interest rate. This is often lower than the rate of an older mortgage. By taking out a new mortgage at, for example, a bank, the monthly costs can decrease.
The partner who remains in the old property usually retains the existing rate until the end of the fixed-rate period. This difference can lead to uneven situations, but is legally permitted.
2. Rental property during a divorce
Different rules apply to a rental property than to an owner-occupied property. The distribution of payment obligations depends primarily on the rental contract and who is named on it.
Joint rental contract
Is the rental contract in both names? Then both partners remain responsible for paying the rent, even if one of them leaves the property. This obligation only changes when the contract is amended or terminated.
Rental contract in one name
If the rental contract is in one partner's name, that person is legally responsible for the rent. The other partner has no obligation towards the landlord, although mutual arrangements can be made.
Allocation of the rental property by the court
In some cases, the court can determine who may continue to live in the rental property, for example when minor children are involved. The tenant remains responsible for paying the rent.
More general information about renting and divorce can be found at: Government of the Netherlands - divorce.
Documenting arrangements in a divorce settlement agreement
Whether it concerns an owner-occupied property or a rental property: clear arrangements are crucial. These arrangements are usually documented in a divorce settlement agreement. This can regulate:
- who pays which fixed costs;
- how long temporary arrangements apply;
- what happens upon the sale or takeover of the property;
- how alimony and other financial compensations are arranged.
If you cannot reach agreement together, the court can make a provisional or definitive decision.
Checklist: fixed costs during a divorce
- Map out all fixed costs (mortgage, rent, insurance).
- Make temporary arrangements in a timely manner.
- Determine what will happen with the property.
- Document arrangements in the divorce settlement agreement.
- Seek legal assistance in the event of disagreement.
Need help with fixed costs and housing during a divorce?
Do you have questions about the distribution of fixed costs during a divorce or would you like help with drafting a divorce settlement agreement? The family law lawyers of Arslan Advocaten are happy to assist you with a careful and fair settlement of your divorce.
View our approach at family law - our approach or feel free to contact us via the contact form.