Property in Separation and DivorceOptions and Solutions

The Three Basic Options

1. Sale and division of the proceeds

The most common and often cleanest solution: the property is sold, outstanding loans are repaid and the remaining proceeds are divided. Advantages: a clean break, no ongoing joint obligations. → Selling a residential property

2. Takeover by one partner

One partner takes over the property and buys out the other. Requirements: a realistic valuation, sufficient creditworthiness for sole financing, and agreement on the buy-out amount. The bank must agree to release the other partner from the loan agreement (Schuldhaftentlassung).

3. Keeping and letting

Both partners keep the property as an investment and let it. In practice this is rarely successful, as ongoing joint management carries potential for conflict. It can work if both partners deal with each other objectively, a professional management company is brought in and a clear agreement sets out who bears which costs and when the property will be sold.

The options compared

Equalisation of Accrued Gains and Property

Under the statutory matrimonial property regime of the community of accrued gains (Zugewinngemeinschaft – which applies automatically in Germany without a marriage contract), the accrued gains are equalised on divorce (Zugewinnausgleich). The property is included in the calculation at its current market value (Verkehrswert).

Important: The accrued gain refers to the increase in value during the marriage. If one partner owned the property before the marriage, only the increase in value since the wedding counts.

For a fair division, an independent property valuation is essential – either by a certified surveyor or as a market-based assessment by an experienced estate agent. → Free valuation

Joint Loan – What Happens to It?

If both partners signed the mortgage loan, both are jointly and severally liable – regardless of who moves out. The bank can turn to either of them. Options:

Release from liability: The bank releases one partner from the loan agreement if the other is creditworthy on their own.

Loan repayment through a sale: The sale proceeds repay the loan. An early repayment charge (Vorfälligkeitsentschädigung) may apply.

Refinancing: The partner taking over takes out a new loan and repays the joint one.

Worked Example: One Partner Takes Over the House

A married couple each own half of a detached house in Coburg. The wife wants to stay in the house with the children.

The wife therefore needs new financing of €250,000 – on her own, based on her income. The bank assesses this as it would a new purchase. Whether the buy-out of €110,000 actually flows in this way also depends on the equalisation of accrued gains: if one partner built up more assets during the marriage, this is offset. This is why the property belongs in the overall calculation of the division of assets drawn up by lawyers or a notary.

Who May Live in the House until a Solution Is Found?

During the separation period, one partner can demand that the marital home be left to them alone if this is necessary to avoid undue hardship – for example out of consideration for the children (§ 1361b BGB). The partner who moves out nevertheless remains a co-owner. In return, they can demand compensation for use (Nutzungsentschädigung), which is based on the local rent.

For ongoing costs: loan instalments, property tax and insurance must continue to be paid. Who bears how much should be agreed in writing. If instalments are not paid, the bank may terminate the loan – with consequences for both.

The Partition Auction: The Last Resort

If the owners cannot agree, each co-owner can apply to the local court (Amtsgericht) for a partition auction (Teilungsversteigerung). The procedure often takes one to two years and has considerable disadvantages:

• The house is auctioned publicly; interested parties can usually only view it from the outside.
• Bids are often well below the market value.
• Court and surveyor costs are incurred.
• The conflict becomes public and lasts longer.

A jointly organised open-market sale is almost always economically better. A neutral estate agent can build a bridge here because they give both sides the same information.

Taxes on Separation

• Land transfer tax (Grunderwerbsteuer): If one spouse transfers their share as part of the division of assets after the divorce, this is tax-free. This also applies to transfers during the marriage. See Land transfer tax.
• Speculation tax: A transfer in return for a compensation payment can constitute a private sale transaction. It remains tax-free if the transferring partner lived in the property themselves until the transfer – or in the two preceding years and the year of transfer – or if the ten-year period since the purchase has expired. Anyone who moved out years earlier should have this checked in advance. Details under Speculation tax.
• Let properties: Here the speculation period is particularly important because there is no owner-occupation.

Checklist for Separating Couples

• Land register extract: Who owns which share?
• Loan agreements: Who is the borrower, how high is the outstanding debt, when does the fixed-interest period end?
• Independent valuation at the current market value
• Agreement on ongoing costs and use until a solution is found
• Discussion with the bank about release from liability or repayment
• Tax review (speculation period, letting)
• Decision: sale, takeover or keeping – recorded in writing

Selling during Separation: Practical Tips

A joint sale during a separation requires particular organisation. In our experience, these rules help:

1. One point of contact for both: The agent informs both owners at the same time and in the same form – for example by email to both.
2. Decisions in writing: Price, minimum bid and notary appointment are confirmed in writing by both.
3. Viewings without conflict: Whoever still lives in the house should, if possible, not be present at viewings.
4. Clear cost arrangements: Who pays for the energy performance certificate, minor repairs and ongoing costs until the sale?
5. Clarify the distribution of proceeds in advance: The notary can distribute the purchase price directly to two accounts after the bank has been repaid, if this has been agreed.

Children and Housing: A Transitional Solution

Many couples want the children to be able to stay in the familiar house until the end of a school year. This is possible with a time-limited agreement: one parent continues to live in the house with the children, pays compensation for use or takes over the loan instalment, and the property is sold or taken over on a fixed date. Such a solution should be set down in writing – with a date, cost arrangements and a clear consequence if the date passes.

If One Partner Does Not Want to Sell the House

It is not uncommon for one partner to want to sell and the other not. There are then several routes:

Mediation often helps to find an amicable solution. A neutral valuation is the common basis for this – see free valuation.

Our Role with Divorce Properties

In this situation, FrankenImmo acts as a neutral intermediary. We value the property objectively, communicate transparently with both sides and ensure that the sales process runs objectively and efficiently – even when the personal situation is difficult.

Discretion goes without saying. On request, we market the property through our network without a public listing.

FrankenImmo – Results-driven brokerage
Phone: 0151 58363197 | Request a confidential consultation