- Mortgage in case of divorce of spouses
- How is a mortgage divided in the event of a divorce?
- Methods of dividing a mortgage loan during a divorce
- How is a mortgaged apartment divided in a divorce if there are children
- Division of a mortgaged apartment purchased with maternity capital funds during a divorce
- How is an apartment purchased with a mortgage before marriage divided in a divorce?
- How to divide an apartment purchased under a shared participation agreement
- Is military mortgage divided in case of divorce?
Mortgage in case of divorce of spouses
The peculiarity of dividing a mortgaged apartment during a divorce is that until the full repayment of the credit obligation, the housing is pledged to the bank, and, therefore, in the legal process for dividing the property, in addition to the divorcing spouses, a third full-fledged party will participate – the creditor bank.
However, the outcome of a court decision on the distribution of mortgaged property after a divorce cannot be predicted in advance. It will depend on many related factors, such as:
- the moment of acquiring real estate with a mortgage (before marriage or during marriage);
- the bank’s point of view regarding the method of dividing the mortgage loan (plays a primary role);
- ownership of funds (who made the initial payment and subsequent loan payments);
- the presence or absence of minor children in the couple and the decision on who they will live with;
- the fact of using maternity capital funds;
- the presence of a shared participation agreement, marriage contract or agreement;
- military mortgage, etc.
How is a mortgage divided in the event of a divorce?
According to the law (Family Code of Ukraine, Civil Code of Ukraine), property acquired during marriage is the common property of the spouses and must be divided equally in the event of divorce (except for the conditions specified in the marriage contract, if any; as well as cases when it was acquired with the personal funds of one of the spouses).
It does not matter which of the spouses signed the loan agreement: whether the spouses act as co-borrowers or one of them took on such an obligation on their own.
In addition, the fact that one of the spouses did not work and did not make periodic mortgage payments, since they were caring for children or were engaged in other household activities (household), is also taken into account.
Despite the fact that the Family Code stipulates that property acquired during marriage is considered jointly acquired property and must be divided equally, the courts do not always make such decisions, since all the circumstances and nuances of each specific family situation are taken into account.
In addition to dividing real estate, spouses in a divorce are faced with the need to resolve the issue of dividing the mortgage loan: who will make payments and in what proportions.
Methods of dividing a mortgage loan during a divorce
When buying an apartment with a mortgage, both are its owners only formally and do not have the right to freely dispose of it. Until the debt obligation is repaid, the property is pledged to the creditor bank – it has the final say in the court process for dividing the mortgage in the event of a divorce.
The main ways to divide a mortgage loan after a divorce are:
- Distribution of debt between spouses and payment in accordance with the shares of property of each of them. In this case, the bank must be sure of the solvency of each of the spouses – if it doubts the income of the spouse, it can impose a ban on the division of the loan.
- Sale of mortgaged housing to spouses, which entails, first of all, payment of the loan, and then division of the funds remaining between the spouses equally (this step can only be done with the consent of the bank).
- Independent sale of real estate by the bank through an auction. It should be noted that the price of real estate in this case falls below the market price and as a result, the separating parties may be left without housing and without funds.
- Agreement between the parties to transfer real estate to the sole ownership of one of them, the man or woman is released from the obligation to pay the loan in favor of the owner (also requires prior approval of the bank and amendments to the mortgage agreement).
Not all of the listed methods can actually be implemented, since every decision about mortgage housing and changes in the living conditions of a married couple must be agreed with the bank (including the decision to separate).
In essence, the bank is not interested in divorce as such – it is important for it to extend the timely payment of monthly payments and prevent delays. The banking organization will assess the family situation and the solvency of the spouses and, first of all, minimize its risks.
How is a mortgaged apartment divided in a divorce if there are children
When a marriage is dissolved, as a rule, children remain with one of the parties (in most cases, with the mother).
However, one should not expect that leaving a child with one of the spouses always leads to an increase in the share when dividing housing. The priority is considered, despite the presence of a child (especially in a large family), an equal division (without taking into account the nuances).
Certain circumstances related to the presence of minor children in the marriage may lead to an increase in the share in the divisible mortgaged apartment in favor of the father and the child, for example, if:
- the second man owns another residential property, but the father, who is left with the common child, does not;
- a mother with many children remains with the children;
- division of a mortgage with a small living space (in such a situation, the court is inclined to transfer the apartment to the sole use of the responsible parent, taking into account the payment for the share of the property);
- the child is disabled.
Priority right to mortgage housing, despite the presence of children, may be received by one of the spouses in the special cases listed above. However, even under the existing circumstances, the court takes into account various accompanying factors related to the case.
In order to resolve the issue of selling a mortgaged apartment, a share of which is claimed by children, it is first necessary to register the minor in a residential premise of equal area. If the housing rights of the minor are violated, specialists in housing issues of the guardianship and trusteeship authorities may be involved in the situation.
Division of a mortgaged apartment purchased with maternity capital funds during a divorce
Based on the Law of Ukraine “On additional measures of state support for families with children”, real estate acquired using maternity capital funds is registered to all family members.
When dividing mortgaged real estate with the investment of maternal capital, only marital shares are subject to distribution; the property of children is inviolable. However, until the child reaches the age of majority, the right to dispose of his property lies with the legal representative – the father.
Example
When the second child was born, Natalia V.’s family used maternity capital to purchase housing. When the marriage was dissolved, both children remained to live with their mother, with the man receiving 1/4 of the property, Natalia and two minor children – 3/4 of the share, respectively.
Способы раздела ипотеки с привлечением средств материнского капитала:
- The safest option, eliminating risks, is the full repayment of the loan obligations of the previous division of the apartment.
- If the spouses divide the mortgage taking into account the existing shares of the property and one of them cannot cope with the repayment of the debt, the banking organization reserves the right, despite the presence of children, to sell the mortgaged housing at auction at a reduced price.
- Refusal of one of the spouses from a share in the property in favor of the other or a child. It is better to do this before the dissolution of the marriage by drawing up a deed of gift (to save yourself from paying taxes when making an agreement between close relatives).
How is an apartment purchased with a mortgage before marriage divided in a divorce?
If one of the spouses gets married, already having a mortgaged home, and subsequent payments were made during the marriage, then upon dissolution of the marriage union it is still considered jointly acquired (after all, a mortgage implies a kind of deferment of payment – and the full purchase of the apartment occurs during the life of the marriage).
Even though the original home loan borrower made some down payment and paid several installments on his own, the other party also has a right to a portion of the property.
To do this, you must provide the court with evidence of your relationship to the mortgaged property, documented (for example, in the form of checks and receipts):
- full or partial payment of mortgage payments;
- increase in the value of mortgaged housing (for example, purchase of building materials, labor investments in repairs, etc.).
If, however, a marriage contract was concluded between the spouses when they entered into marriage, then the division of property will be simplified and provided for by pre-agreed conditions:
- the size of the parties’ shares;
- the amount of compensation for failure to comply with the terms of payment;
- the shares of mortgage payments, etc.
How to divide an apartment purchased under a shared participation agreement
The equity participation agreement related to mortgage lending also has many nuances and special cases. Let’s consider the main ones.
- The payment was made and the contract was concluded before the marriage, but the registration of the property rights arose during the marriage. In such a situation, when dividing real estate, the court will not look at the actual emergence of the right during the marriage, but will take into account the acquisition of housing and its payment during the marriage by one of the parties (with sole funds).
- If, in a similar situation, one of the parties (not yet being a legal husband or wife) financially participated in the payment for the property, they have the right to claim a share of the housing after the divorce in terms of making payments. Although it is necessary to prove to the court your participation in the contributions with documents or with the involvement of witnesses.
- When the equity participation agreement was concluded during the registration of the family union, and the full cost of the housing was paid and the property was registered during the marriage, the court will not take into account from whose income the payments were made, since all financial savings of the spouses are considered common.
An exception here is money received by one of the spouses as a gift or inheritance. It does not belong to the common property, and the court will have to divide the property in shares proportional to the personal contributions made by each of the spouses (if any).
- When a contract is concluded and housing is paid for during the marriage, and in the event of a divorce the house has not yet been commissioned, the court may divide not the apartment itself, but the right to use it in the future.
Is military mortgage divided in case of divorce?
Military mortgage differs from civil mortgage lending in that the payments are made by the state (namely, the Ministry of Defense of Ukraine). The participant in the lending program is a serviceman. Therefore, military mortgage and housing:
- cannot be transferred to another person (for example, a wife);
- cannot be divided between husband and wife.
These provisions are based on the norms of the Family Code of Ukraine and the Law of Ukraine “On the accumulative mortgage system of housing provision for military personnel”.
However, each case is individual, and in certain situations a wife or husband can still count on financial compensation for part of the housing, proportional to their financial investment in it, for example:
- when the personal funds of the second spouse were invested in the acquisition of real estate (gifts, received from the sale of other personal housing or property, inherited);
- when maternal capital funds were used to pay off the mortgage, etc.
It should be remembered that it is not advisable to resolve the issue of compensation for investments in military mortgaged real estate in court before the loan is repaid, since the apartment is doubly encumbered: by the Ministry of Defense of Ukraine and the creditor bank.
After the obligation has been repaid, the second family member may only have the right to a refund of financial expenses within the limits of their own documented investments.
