Divorce property - marriage contract: yes or no?
According to German law, the matrimonial property regime of community of accrued gains automatically applies when a marriage is entered into, unless expressly stipulated otherwise. In the case of community of accrued gains, the assets generated during the marriage, i.e. the accrued gains, are divided equally between both partners in the event of a divorce.
If one of the spouses has brought a property into the marriage, a marriage contract can stipulate that this is not included in the equalization of gains. A prenuptial agreement can also stipulate, for example, that one spouse keeps the house after the divorce and the other is compensated with monthly equalization payments. Even if it is not romantic, it makes sense to consider concluding a prenuptial agreement at an early stage, especially in the case of one-sided assets.
Shared house on divorce: What should happen to the shared property?
The division of financial assets and investments in securities is easy to accomplish in the event of a divorce, as these assets are clearly divisible. However, unlike financial assets, a house or an apartment cannot be divided so easily. If the statutory matrimonial property regime of community of accrued gains applies, the situation here is much more complicated, as the spouses have to agree on what should happen to the property during the divorce. There are various options for this:
1. partition auction: the worst solution
A partition auction always takes place when both spouses are unable to agree on what should happen to the divorced property. In this case, both parties can apply to the local district court for a partition auction. The house will then be auctioned off publicly by the enforcement court. The highest bidder wins the auction. In a partition auction, a significantly lower sale price is usually achieved than in an amicable sale. There are also court costs and the costs of the expert. A partition auction is therefore the worst solution for both partners.
2. real division: the house is divided into two separate residential units
The declaration of division is possible if the property being divorced is a house that consists of several residential units. In this case, each spouse can be granted sole ownership of certain living areas, so that the property is divided without the house having to be sold as a result of the divorce. The spouses can then dispose of the respective residential unit as sole owners and decide independently whether to live in the home themselves, sell it or rent it out. Real division is only possible in rare cases, as the architectural and structural conditions must permit division.
3. transfer of ownership: One spouse can remain in residence
Transfer of ownership is when a jointly owned house is not sold after the divorce, but one of the spouses remains living there. In this case, the person who moves out must be paid out. To ensure that this is done correctly, the current market value of the divorced property is determined in advance. The financing bank must also play its part in the transfer of ownership, as only with its consent can the spouse who is being paid out be released from joint and several liability on the property loan. Ideally, the transfer of the property should take place before the divorce date, as this saves the acquiring party from having to pay land transfer tax.
4. gift of the house to the children
The transfer of ownership can also take the form of a gift to the joint children. In the case of children under the age of 18, the guardianship court must usually give its consent. With this option, all rights and obligations relating to the property are transferred to the child. Even if the property remains in the family with this solution, it is very important that the interests of the child are always at the forefront. With this option, it is therefore essential to ask yourself whether the gift is also the best solution for the child.
5. renting out the house
It is also possible to keep a shared house after the divorce and rent it out. This option is particularly interesting if selling the property does not currently make sense due to economic considerations. The basic prerequisite for renting out the house is that both partners agree to the terms agreed in the rental contract. The rental income and costs incurred are then divided equally. However, as joint decisions still have to be made, this option is only an option if you are still on good terms with your ex-partner after the divorce.
6. sale of the property by mutual agreement
There are many reasons why the divorcing spouses separate from the joint property. On the one hand, economic considerations play an important role here. On the other hand, many people in this situation want to start their new phase of life without any old burdens and therefore see the amicable sale of the shared home as the best solution. After the successful sale, the proceeds from the sale are divided equally between both partners, depending on the respective ownership shares in the house. Any existing loans must be repaid in full beforehand.
What are the arguments in favor of selling the shared house in the event of divorce?
In many cases, selling a divorced property by mutual agreement is the only feasible solution. The most important reasons for this are:
- The desire to disentangle the marital union in order to draw a clear line in the sand
- the financial situation
- The house formerly used jointly is too big for one partner alone and therefore no longer suits the living circumstances
In order to be able to make the decision for or against selling your house in the event of your divorce from an economic point of view, you should first determine the value of your property. As an experienced real estate agent in the Munich area, we will be happy to provide you with a precise property valuation in person.
