What should you do with the house in the event of a divorce?

What should you do with the house after a divorce? It is a common but painful process. In addition to the separation itself, other aspects must be considered, including making a decision about the family home. Whether you separate by mutual consent or under more difficult circumstances, there are certain principles to bear in mind so that you can make the right decisions on an informed basis.

The principle of protecting the family home

The principle of protecting the family homemeans that neither spouse may let, mortgage, give away or sell the family home without the other’s consent. This principle also covers the furniture in the home.

What is meant by the family home?

The family home is the place where the family actually lives as its main residence, whether or not its members are officially domiciled there. This principle therefore does not apply to second homes, for example.

Be careful: do not assume that this principle does not apply to you simply because you are the sole owner of the property! However, it goes without saying that if you jointly decide to sell, the owner will receive the proceeds of the sale in proportion to their contributions. This principle applies whether you are married under a separation of property or community property regime, and also if you are legal cohabitants; only de facto cohabitants are not subject to this principle.

If one spouse wishes to sell or let the property despite the other party’s refusal, it is up to the judge to decide whether that refusal is unreasonable and, if so, to compel the reluctant party to agree.

What are the options in the event of separation or divorce by mutual consent?

If you are married under the community property regime, a property may be brought into the marital community, which is fairly common practice. The community property agreement also makes specific provision for any accounts that would need to be settled if the marriage were dissolved through divorce.

In other cases, if two people purchase a property together, the joint ownership arrangements must be clearly defined by contract in order to govern the joint ownership in the event of separation.

1. Sell the house

This is, in principle, the simplest solution: you can decide to sell the house and divide the proceeds according to an allocation agreed by mutual consent, after repaying the outstanding balance of the mortgage loan.

2. Remain joint owners

Although separated, you remain co-owners of your property and therefore continue to hold it in joint ownership.. Joint ownership can raise difficult questions, such as: who will manage the letting and receive the rent? Who will repay the mortgage loan? Who will take care of repairs? And so on.

The first solution:if the former spouses are on good terms, you can decide to manage the joint ownership between yourselves and resolve these matters yourselves.

It is even possible to enter into a joint ownership agreement before a notary to prevent the other party from selling. This agreement cannot be entered into for more than five years.

The second solution:sell. When joint ownership is not working well, the best solution is often to sell the property.

This sale can be conducted privately, with the assistance of an estate agency or by public auction.

Why do some people prefer a public auction?

As a public auction is conducted entirely under the supervision of a notary, there is no risk of one spouse making an arrangement with the prospective buyer with a view to receiving compensation outside the sale agreement. A public auction is therefore a transparent procedure recommended where there is mistrust between former spouses. This procedure may also be imposed when the court orders the sale.

However, a public auction is not always the best way to obtain the optimum price.

GOOD TO KNOW: No one can be forced to remain a joint owner. Therefore, in the event of disagreement, the sale may be compelled and the property offered at public auction.

3. Buy out your spouse’s share of the house

This simply involves buying out your spouse’s share, which is known as atransfer of undivided rights.

To do so, you will need to have your property valued. The spouses may either agree on the price or appoint an expert. Each spouse may also appoint their own expert.

Naturally, the person taking over the property will have to compensate the other by paying them a certain amount. The formula most commonly applied is as follows: first, the current value of the house must be determined. All costs and repayments relating to the house must then be deducted from this gross value (the outstanding capital balance of the mortgage loan, reimbursement of personal funds invested in the house by either party, etc.). The difference represents the net value, which must be divided equally. The person taking over the property will pay the other half of this net value and will be responsible for the aforementioned repayments.

Please bear in mind that you will have to pay registration duties in this case (1% in Brussels and 2.5% in Flanders). However, in the event of separation or the termination of legal cohabitation, there is an allowance of 50,000 euros, plus an additional 20,000 euros per child.

For example, if you buy out a property valued at 400,000 euros and have three children, you will only pay registration duties on an amount of 400,000 - 50,000 - 3 x (20,000) = 290,000, resulting in registration duties of 2,900 euros. Do not forget to add the notary’s fees.

Remember to notify your bank that your spouse is released from the obligation to repay the mortgage loan and that you are therefore assuming responsibility for the loan repayments. This is known asrelease from joint liability. Please note that, as the repayment terms are no longer the same, you will need to renegotiate the loan with your bank.

Preferential allocation:

One spouse may request that the house be allocated to them for economic or social reasons: for example, a doctor who practises from the house. If they obtain the magistrate’s authorisation, the person taking over the property must still compensate the other party as explained above.

Give away the house

It is also possible to gift your home to your children. This is fairly advantageous from a tax perspective, as it means that your children will not have to pay inheritance tax in the event of your death. However, be careful, as this also means that, should you experience financial difficulties, you will have no rights over the property…

Buying a property during divorce proceedings

If you are married under a separation of property regime, this will not be a problem.

However, under a community property regime, you may consider buying on your own, but even if divorce proceedings are under way, you will need special authorisation to avoid any problems.

There are therefore various options for managing your property in the event of divorce. Make sure you obtain as much information as possible and seek the right professional advice.

Now that you know what to do with your home after a divorce, if you would like to find out more about the latest developments in the property sector, we invite you to browse our blog, which is packed with interesting articles. And if you would like to daydream about properties, browse our available properties.