Home Ownership – What should be considered in the Event of Divorce?

Home Ownership – What should be considered in the Event of Divorce?

Home Ownership – What should be considered in the Event of Divorce? 2560 1707 HYPOHAUS - Swiss Mortgage Broker Experts
What happens to the property in the event of a divorce?

It is unpleasant, but nevertheless necessary to think about such scenarios, because when a couple separates, many questions often arise regarding the joint property. In the following we would like to show you which questions should be clarified before the marriage so that a possible divorce does not become a nightmare.

Marital property regime

When a marriage is divorced, the partners divide their assets according to the marital property regime chosen. In Switzerland, there are three marital property regimes – joint ownership, separation of property and community of property. The legal marital property regime that is most common is the division of acquired property. Under this regime, the assets of both partners are divided into personal property and acquired property. Roughly speaking, personal property includes everything that one partner owned before the marriage or received during the marriage in the form of gifts and inheritances. The inheritance primarily includes the assets that were generated during the marriage. After the divorce, these assets are halved unless otherwise agreed. This type of dissolution of the marital property regime applies automatically unless otherwise agreed in a marriage contract. You should therefore also give some thought to the marital property regime at the time of marriage, especially with regard to the potential acquisition of residential property.

Property ownership

If residential property was acquired during the marriage, it is important to know whether the house or flat was bought out of the assets of the marital property or of the acquisition. As a rule, residential property purchased during the marriage counts as an acquisition, unless, as already mentioned, there is a marriage contract. It can therefore make sense to define the ownership relationships between the partners based on the funds contributed and also to record them accordingly in the land register. The law provides for three possible forms of ownership: Sole ownership, joint ownership and co-ownership. In the case of sole ownership, the property belongs to one partner alone; in the case of joint ownership, it belongs to both partners; and in the case of co-ownership, both partners are entered in the land register, but with their respective shares.

Existing mortgage

Should one part of the couple continue to live in the joint residential property in the event of a divorce, the individual costs will increase for this person. It must therefore be checked whether the property can continue to be financed by only one of the partners and whether it is affordable. If the affordability is not given, there are three possibilities: The mortgage remains on both partners (joint and several liability) and the ownership structure does not change, the mortgage is terminated early and the property is sold, or the property is sold and the mortgage is transferred to the new owner and continues under the same conditions. Last but not least, a sale of the property is also an option.

It can be difficult to think of possible negative scenarios during the marriage and to discuss them together. Nevertheless, it is worth discussing the ownership of a property at an early stage and recording this in the land register. If the property belongs to both spouses, it is advisable to set out the circumstances of the financing in a marriage contract.