The property on separation: use, housing advantage and ownership

The land register decides, not the wallet

With property a simple rule applies first: the owner is whoever is entered in the land register. Who services the loan, who transfers the instalments or who stays living there after the separation changes nothing about it.

Where both spouses are entered, they are co-owners, as a rule in equal halves (§ 1008 BGB, community by fractional shares). Where only one is in the land register, that one is the sole owner, even where the other contributed financially. Such contributions can have an effect later in the equalization of accrued gains; ownership itself they do not touch at first.

Zugewinngemeinschaft: separate ownership, balancing only on divorce

Without a prenuptial agreement, spouses live in the Zugewinngemeinschaft (community of accrued gains). That means the assets of the two stay separate during the marriage. The property does not automatically become joint property through the wedding.

The balancing happens only on divorce, through the equalization of accrued gains (§ 1378 BGB): what is compared is by how much each spouse’s assets grew during the marriage, and whoever achieved the greater growth pays out half the difference. An increase in the value of the property enters that calculation as well. How exactly the property is valued for it, which cut-off date counts and what that means specifically is set out in detail by the property in the equalization of accrued gains.

A restriction on disposal: no going it alone with the assets as a whole

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

A sale by one spouse alone is therefore in many cases not possible without the other’s involvement, not even where only one of them is in the land register. The provision protects the family’s economic basis from being given away by one spouse acting alone.

Which options are there for the shared property?

Where the property belongs to both, a joint route has to be found. In practice four solutions above all come into question.

• A joint sale: the property is sold, and the proceeds are divided after the loan has been repaid.
• Takeover by one spouse: one takes over the other’s co-ownership share against a payment, with an adjustment in the land register and the financing clarified.
• Letting: the property stays in joint hands and is let, with the rental income divided.
• A partition auction: as a last resort, where no agreement can be reached (§§ 749, 753 BGB in conjunction with the ZVG).

Taking over is frequently the solution where, for instance, children are to stay in their familiar surroundings. It presupposes that the spouse taking over can carry the financing and that the other is released from their co-liability. The partition auction, by contrast, is the least favourable route, because the auction proceeds are often below 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 agreement. Where both spouses signed the loan agreement, they remain bound towards the bank as joint and several debtors: each is liable for the full instalment, even where only one of them stays living there.

Compensation for use and the route to an agreement

Where one spouse stays living alone in the shared property, the other can under certain circumstances demand compensation for use. During the period of separation that follows § 1361b (3) BGB; whether a claim exists and in what amount depends on the individual case and is often looked at together with maintenance.

It is advisable to settle the winding-up of the property early, ideally in a notarized divorce settlement agreement. Where needed, the value can be established by an expert report so that the payment or the division of proceeds rests on a solid basis. That way you avoid the largest financial question of the separation having to be decided in court in the end.

Two levels that often get confused

Who lives in the property and who owns it is one question; at what value it enters the assets calculation is quite another. The first is dealt with by our page on matrimonial home, property & household goods, the second by the property in the equalization of accrued gains: there the market value less encumbrances counts, and the land register changes nothing about the equalization.

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

With property, law, financing and tax meet: a route that is clean in law can be the worst one economically. Bring the land register extract, the loan agreement and the current state of the loan to the conversation.

Legal notice: This article is provided for general information and does not replace legal advice in an individual case. Any laws, deadlines and amounts mentioned reflect the state of affairs at the time of publication and may change. A binding assessment requires a personal consultation.