REAL ESTATE IN THE EVENT OF SEPARATION OR DIVORCE
For spouses, real estate regularly represents the most valuable joint possession. The situation becomes all the more emotional when it comes to divorce. The spouses must clarify what is to happen to the joint property in the event of divorce. The prerequisite for both spouses to be able to decide is that both spouses are the owners of the property, i.e. both are registered as owners in the land register.
By law, both spouses have an equal right to use the property. In order to clarify what happens to the property, the law focuses on the period of separation up to the divorce and the period after the divorce.
USE OF THE PROPERTY BETWEEN SEPARATION AND DIVORCE
In principle, separation is not a reason to require the other to move out of the joint property. The law assumes that both can live separately in the joint property. In this case, the division is the same as in a shared apartment. In practice, however, it turns out that this situation can lead to emotional stress, especially for joint children.
In order to avoid undue hardship, an assignment can also be applied for at the family court according to § 1361b BGB. However, this is only justified if assault, serious insults or similar occur. However, an assignment does not change the property relations. Even with an assignment, both spouses remain owners of the property.
If both spouses agree on who will move out and who will remain, the law assumes that the one who remains in the house or apartment must pay compensation to the other (known as compensation for use). The purpose of this is to provide compensation. It is a prerequisite that payment is clearly demanded. A retroactive request is not possible. Compensation for use also does not apply if, for example, the spouse remaining in the apartment or house has no income and looks after the joint children.
USE OF THE PROPERTY AFTER DIVORCE
§ Section 1568a of the Civil Code, following Section 1361b of the Civil Code, regulates the final use of the marital apartment or house by a spouse on the occasion of divorce. According to this provision, one spouse may demand that the other spouse give him or her the property if he or she is more dependent on it for the welfare of the children living in the household and due to his or her own living conditions than the other spouse, or if it is equitable for other reasons.
Pursuant to Section 1568a (5) of the German Civil Code (Bürgerliches Gesetzbuch – BGB), in the event of a transfer, each spouse may demand that the other spouse establish a tenancy on terms customary in the locality.
If the spouses cannot reach an agreement, one may demand that the other change the management and use of the property pursuant to Section 745 (2) of the German Civil Code, i.e., either grant the use of the property or pay a compensation claim. It is recognized in case law that only this demand can give rise to a subsequent compensation claim.
SALE AND AUCTION OF THE JOINT PROPERTY
If one spouse wants to take over the co-ownership share from the other, he or she must buy this share. The amount corresponds to the share of the market value. This can be determined either by comparison objects, by banks or brokers, or in case of dispute by an expert.
If there are debts, it must be clarified who bears the debt burden. If the home is financed by a loan, it is advisable to release the spouse who does not remain in the apartment or house from the loan agreement. Otherwise, he or she will also be liable for the fulfillment of the obligations under this contract, even though he or she is no longer the owner. Since the bank is regularly the lender and must give its consent, the remaining spouse must be solvent. Otherwise, the bank will withhold its consent.
Since a divorce is always emotionally stressful, it may happen that one spouse rejects the other’s proposal to sell.
If no amicable solution can be reached, the spouse’s only option is to force a so-called partition auction in court proceedings. In the course of the partition auction, both spouses can also bid. However, this can be economically disadvantageous for both spouses. In the worst case, it can even come to a situation where the debts are not covered due to a lack of equity capital in the case of a very high financing share.
JUR | URBAN ADVISES ON REAL ESTATE LAW MATTERS IN CASES OF SEPARATION AND DIVORCE. DO YOU HAVE ANY QUESTIONS?