Divorce and Property

For many couples, owning a house or a flat is a dream come true. But when the marriage breaks down, the question quickly arises of what is to become of the shared home. Dr. Christina Schmidt, attorney at law (Rechtsanwältin), is an expert in divorce law and provides comprehensive, expert advice on all matters relating to property in divorce.

These include, among others, the following questions:

01 Who owns the property?

In many cases, married couples buy their home together and both become owners. The property may, however, belong to only one of the spouses – for example, if he or she already owned it before the marriage or inherited it during the marriage. What ultimately counts is who is registered as owner in the land register (Grundbuch).

02 Property and separation

When it comes to deciding who may continue to live in the marital home (Ehewohnung) between separation and the final divorce, ownership is not yet the decisive factor. Regardless of who owns it, both spouses initially retain the right to use the home.

In practice, however, one of the spouses usually moves out when the couple separates. If the spouses cannot agree on who stays in the home, either of them can apply to the Family Court (Familiengericht) for the marital home to be allocated to them for their sole use. The welfare of any shared children, who should not be uprooted from their familiar surroundings, can play a decisive role here.

If one spouse is the sole owner, this must be given particular weight in the decision. The other spouse will then have to put forward very serious reasons to be allocated the home. In addition, the co-owner or sole owner can demand payment for the use of the home if he or she leaves it to the other spouse.

After a separation, Dr. Christina Schmidt advises you in detail on all questions relating to the allocation of the marital home and enforces your rights on your behalf.

03 Property and divorce

In the event of a divorce, it must be decided what is to be done with a property that the spouses own jointly.

There are various options for this.

• Sale: If the spouses can agree to sell their jointly owned property, an amicable sale is the obvious solution. The proceeds can then be divided between them.
• Letting: Alternatively, the spouses can agree to let the house or flat jointly to a third party and share the rental income. For couples in deep conflict, however, this can be difficult, since they will continue to act together as landlords and will repeatedly have to agree on matters concerning the tenants.
• Transfer to one of the spouses: Another option is for one spouse to take over the property as sole owner and buy out the former partner. The spouse who keeps the house is then registered in the land register as sole owner. With this solution, the spouses must agree on the amount of the compensation payment. In addition, the spouse taking over the house or flat must have sufficient capital available to buy out the other.
• Transfer to a child: The former spouses also have the option of transferring the property to a shared child. If the child is a minor, the approval of the guardianship court (Vormundschaftsgericht) must be obtained. The drawback of this option: together with the house or flat, the child takes on not only rights but also the obligations of an owner, such as taxes and maintenance costs. The transfer of a house or a flat – whether to the former spouse or to a child – must be notarised. Dr. Christina Schmidt will gladly advise you in detail before the appointment with the notary and will draft the contract for the transfer of ownership for you.
• Division: A further solution is to divide the property. In what is known as physical division (Realteilung), the property is separated into two structurally independent residential units. Physical division is carried out by means of a notarised declaration of division (Teilungserklärung). Each of the former spouses thereby becomes sole owner of his or her unit and can deal with it independently and without the other's consent – for example, by continuing to live there, selling it or letting it. A larger house with two storeys and separate entrances can, for instance, be divided into two freehold flats. Smaller plots, houses or flats on their own, by contrast, are often unsuitable for physical division. Good to know: The physical division and any building work it requires must comply with the requirements of the local development plan (Bebauungsplan) and the applicable building regulations. Plots of land to be divided must be newly surveyed.
• Partition auction: Finally, if the spouses cannot agree on what should happen to the jointly owned property, there is the option of a so-called partition auction (Teilungsversteigerung). Any co-owner can apply for one at the competent Local Court (Amtsgericht). The house or flat is then sold at public auction. The drawback: the proceeds generally fall considerably short of the property's value or of what a sale could achieve, and both spouses end up losing money. A partition auction should therefore always be a last resort.

Dr. Christina Schmidt has many years of experience in all matters relating to the division of assets and the handling of property in divorce. She knows the advantages and disadvantages of the various options inside out and advises you in detail on which solution is best suited and most advantageous for your individual case. Dr. Schmidt also drafts the necessary documents for you and represents you in the event of a dispute.

04 Divorce and property financing

If the spouses bought a house or flat together, they will usually have taken out a mortgage loan to do so. Even after a divorce, this loan must be repaid by whoever signed the loan agreement. In most cases both spouses are borrowers and are therefore, initially at least, both obliged to make the payments due to the bank. For the bank, it makes no difference whether the spouses are divorced or which of them is still living in the house.

In exceptional cases, however, a spouse's joint liability may be contrary to public policy (sittenwidrig) – for example, if a wife with no income or assets who co-signed the loan would be completely overburdened financially by it and the bank was aware of this when the contract was concluded.

How future instalments are to be dealt with depends, moreover, on what happens to the property itself: if the house is sold, for example, the loan can be repaid from the proceeds. If, on the other hand, one of the former spouses takes over the property, an agreement can be negotiated with the bank that only he or she will continue to pay the instalments. The bank is, however, under no obligation to agree to this. As a rule, a new loan agreement must also be concluded with the former spouse concerned in this case. If the spouses are planning a physical division, the financing bank must likewise be involved and its consent obtained.

Caution If a loan is redeemed early – whether or not a new loan agreement is concluded – banks can generally demand what is known as an early repayment charge (Vorfälligkeitsentschädigung)!

Dr. Christina Schmidt provides you with detailed information on what to bear in mind regarding property financing in a divorce and how to avoid costly mistakes.

05 The family home in questions of accrued gains and maintenance

In a divorce, the family home also plays a role in maintenance matters and in what is known as the equalisation of accrued gains (Zugewinnausgleich). This term refers to the balancing, on divorce, of the increase in both spouses' assets during the marriage. It applies where the spouses have lived under the statutory matrimonial property regime of the community of accrued gains (Zugewinngemeinschaft), i.e. where they have not contractually agreed on a different regime (separation of property (Gütertrennung) or community of property (Gütergemeinschaft)).

What many people do not know: even if only one spouse is the owner, the property can be taken into account when calculating the accrued gains! This applies at least to increases in value, in particular those resulting from modernisation work carried out jointly by the couple. Moreover, the sole owner of the house may not sell it without the other spouse's consent as long as the equalisation of accrued gains following the divorce has not been settled!

The family home is also relevant to maintenance matters:

• If, for example, a spouse who is liable to pay maintenance transfers his or her share of ownership to the other spouse, who continues to live in the house, this may need to be taken into account when calculating maintenance.
• A spouse liable to pay maintenance who continues to help finance the house after the divorce, even though only the former spouse lives in it, may be able to have his or her loan instalments credited against the maintenance he or she owes.
• If one spouse uses the house alone while the other remains a (co-)owner, the former usually has to pay compensation for use (Nutzungsentschädigung) or rent. Such payments must also be taken into account when calculating the appropriate amount of maintenance.

Dr. Christina Schmidt explains in detail how jointly owned property is to be taken into account in questions of maintenance and the equalisation of accrued gains. She works out the arrangement that is most favourable to you, negotiates with clear objectives and represents you with dedication and determination.

06 Marriage contract and divorce settlement agreement

As shown above, property raises a whole range of problems in a divorce. These can be avoided if the handling of the property is settled in good time in a marriage contract (Ehevertrag). If a separation is already on the horizon, the necessary arrangements can still be made in a divorce settlement agreement (Scheidungsfolgenvereinbarung).

Dr. Christina Schmidt is an expert in family law and draws on her expertise and experience to advise you on how to make provision for your property matters in a marriage contract or a divorce settlement agreement. Settling all related questions amicably and in good time is usually the best choice.

You own a property and would like to make provision in case of divorce? Or perhaps a divorce is already imminent? Dr. Christina Schmidt drafts and reviews marriage contracts and divorce settlement agreements involving property for you. She represents you both in and out of court in divorce proceedings in which residential property is at stake – whether the issue is the division of assets, its relevance to maintenance or problems with financed property.