Property on separation: use, housing advantage, ownership

The land register decides, not the wallet

With property, one simple rule comes first: the owner is whoever is listed in the land register. Who services the loan, who transfers the installments, or who stays in the home after the separation changes nothing about that.

If both spouses are registered, they are co-owners, usually in equal halves (§ 1008 BGB, co-ownership in fractional shares). If only one of you is in the land register, that person is the sole owner, even if the other contributed financially. Such contributions can matter later in the Zugewinnausgleich (equalization of accrued gains), but at first they do not affect ownership itself.

Community of accrued gains: separate ownership, equalization only on divorce

Without a marital agreement, spouses live in the Zugewinngemeinschaft (community of accrued gains). This means that during the marriage, each spouse’s assets stay separate. Getting married does not automatically turn the property into joint property.

The balancing happens only on divorce, through the Zugewinnausgleich (equalization of accrued gains) (§ 1378 BGB). The comparison looks at how much each spouse’s assets grew during the marriage, and whoever gained more pays out half the difference. An increase in the value of the property is part of that calculation too. How exactly the property is valued, which cut-off date counts, and what that means in practice is explained in detail in Property in the equalization of accrued gains.

Restriction on disposal: no going it alone with all your assets

Even a sole owner cannot always act freely. A spouse can dispose of their assets as a whole only with the other spouse’s consent (§ 1365 BGB). Since a single property often makes up most of the assets, a sale frequently falls under this restriction.

A sale by one spouse alone is therefore often impossible without the other spouse’s involvement, even if only one of you is in the land register. The rule protects the family’s economic foundation from being given away by one spouse acting alone.

What are the options for the shared property?

If the property belongs to both of you, you need to find a way forward together. In practice, four solutions are the main ones.

• Joint sale: the property is sold, and the proceeds are divided once the loan has been paid off.
• Buyout by one spouse: one of you takes over the other’s co-ownership share in return for a payment, with the land register updated and the financing sorted out.
• Renting out: the property stays jointly owned and is rented out, and the rental income is divided.
• Partition auction: as a last resort, if no agreement can be reached (§§ 749, 753 BGB in conjunction with the ZVG).

A buyout is often the solution when, for example, the children are to stay in familiar surroundings. It requires that the spouse taking over can carry the financing and that the other is released from joint liability. A partition auction, by contrast, is the least favorable route, because the auction proceeds often fall short of what a sale on the open market would have brought.

What happens to the joint loan?

Moving out of the property releases nobody from the loan. If both spouses signed the loan agreement, both remain jointly and severally liable to the bank: each of you is liable for the full installment, even if only one still lives there.

Compensation for use and the way to an agreement

If one spouse stays in the shared property alone, the other can under certain circumstances claim compensation for use. During the separation, this is governed by § 1361b (3) BGB. Whether a claim exists and how much it is depends on the individual case, and it is often looked at together with maintenance.

We recommend settling what happens to the property early, ideally in a notarized divorce settlement agreement. If needed, the value can be established by an expert appraisal, so that the buyout payment or the division of proceeds rests on a solid basis. That way, the biggest financial question of your separation does not end up being decided in court.

Two levels that often get mixed up

Who lives in the property and who owns it is one question; at what value it enters the calculation of assets is quite another. Our page on marital home, property & household goods covers the first. The second is covered in Property in the equalization of accrued gains: there, the market value minus encumbrances counts, and the land register changes nothing about the equalization.

Because the housing advantage also enters the maintenance calculation, the two are connected; for that, see separation & maintenance. If the property was inherited, special rules apply that can considerably lower the amount to be equalized.

With property, law, financing and tax meet: a route that is sound in law can be the worst one financially. For our conversation, please bring the land register extract, the loan agreement and the current loan balance.