Divorce when you own a property
How to manage the sharing of assets?
Divorce: What happens when spouses own the family home, secondary housing or investment property?
Divorcing when you are an owner means having the choice between several options concerning the real estate held jointly by the couple, or constituting the family home.
1. Three options are possible:
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- Sell the property and split the profit resulting from the sale
Very often, the separating couple wisher to turn the page and chooses to resell the family home or the property held jointly.
In this case, the sale price is shared between the two future ex-spouses.
This distribution is carried out by the notary at the time of the sale. It takes into account different parameters such as mfvatrimonial regime (participation in acquisitions, community of property or separation of property), the investments made by each (own funds and repayment of the mortgage debt) or the shares held in the property by each of the spouses.
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- Buy out the other’s share to keep the apartment or family home
This option is often motivated by the presence of children who the parents do not wish to uproot. An element which can also be taken into account in the decision taken by the judge, if the spouses cannot reach an amicable agreement.
The first step to do by each spouse separately is to verify their respective financial situation. To do this contact your bank or a financial advisor.
In this case, it will be necessary to calculate the amount of the share to be bought back from the spouse. A property valuation generally serves as the basis for the calculation. Once this value has been validated, the notary will be able to make the modifications required by an authentic deed.
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- Remain co-owners of the property
This option is very rarely chosen as it implies that the ex-spouses agree to maintain a long-term link and continue to jointly assume their commitments regarding the property, its management, the distribution of the expenses that it represents.
2. What should be done if the parties disagree on the value of the property?
Sometimes, even if one agrees on the principle of selling the property or transferring the shares of ownership, we may not agree on the desired price. It can happen that the one who gives up the ownership share overestimates its value, while the other who buys back the share underestimates its value.
To come to an agreement, 3 reliable and disinterested estimates from real estate professionals in your area should be requested. You will thus have a price range representative of the current market, which will allow you to find common ground on the sales price to display or on the sharing value.
Please note that the brokers to whom you entrust the sale of your property are commissioned in proportion to the sale price : the higher it is, the better they are paid. They generally base themselves on recent sales in your region and advice you on the price that will allow you to make the sale at the best conditions: price and duration of the sale. These two parameters are generally linked. We are happy to be of assistance for a free, no-obligation estimate.
In the event of a significant disagreement, you can us an expert who can only intervene for the appraisal and not for the sale of the property. Members of the Swiss Chamber of Real estate ; Chambre suisse des experts en estimation immobilière are required to respect strict rules of methodology and ethics, thus guaranteeing you an objective estimated value, admissible by a judge.
3. What to do if the owners do not agree on who keeps the property?
This central question – who will stay in the accommodation and who will leave – is often fraught with a lot of emotion. It is sometimes difficult for spouses to agree on this point. Both wanting to be the one able to stay.
Sometimes, however, it is possible to avoid this battle by checking your finances from the start, as advised above. In many cases, it is the bank’s analysis that gives the solution:
- If neither spouse has the capacity to finance the property alone: neither spouse can stay, and the property will have to be put up for sale.
- If only one spouse obtains the needed financing, the question of who can retain the property is thus resolved.
- If each spouse can finance the property but neither wants to give up the property, we recommend calling on a mediator. In the end, in the event of truly a blocked situation, the judge will have to decide after a procedure that is often long and costly emotionally and financially.
4. What to do if one of the owners does not want to sell?
Let us first clarify an important point: Family housing is protected in Switzerland. It is impossible to sell it without the consent of the spouse.
And this even if the family home belongs to only one of the spouses: the notary has the obligation to include the non-owner spouse in the deed of sale so that he/she gives his/her consent.
If the family home is owned by both spouses, the co-owners must agree on the sale and its conditions (price, timeline etc) and they will have to sign the deed jointly at the notary.
As a last resort, if not agreement is reached, i twill be up to the judge to decide. We recommend once again to do everything possible to reach a mutual agreement, which will avoid a lot of stress and additional expenses.
Let us remember that the value of real estate evolves, that its estimate carried out over a given period and in a given market cannot be guaranteed in the long term. One must take into account the maintenance costs to be assumed until the question of sharing is resolved.
5. What fees must be paid when selling your property during a divorce?
Whatever the reason for the sale, the same costs are to be expected when changing ownership:
- The tax on profits and real estate gains: this is a tax calculated on the capital gain realized during the sale. In Geneva, the tax rate is linked to the duration of ownership (read our article on this subject). It is also possible to obtain under certain conditions a deferral of taxation (commonly called « remploi »).
- Transfer tax fees: these vary from one canton to another. They are taken by the notary during the sale.
- The brokerage commission: this commission is only due to the real estate agency in the event of success, and the sellers must not pay anything to the agency before signing the sale with the notary. Please note: the amount of the brokerage commission will be deducted in the calculation of the capital again, which in turn reduces the tax on profits and real estate gains mentioned above.
Other costs: It is appropriate to mention here the possible penalties that your bank could claim if the mortgage contract is terminated ahead of schedule. This calculation takes into account the remaining contractual term and the amount of the mortgage. Your bank will be able to inform you on this subject. Good to know: this amount is also deductible in the calculation of the tax on profits and real estate gains.
Our Advice
As a real estate agency, we regularly accompany our clients during major events in their lives, as it is often these events that lead to a change accommodation.
And separation is one of them. It is often a financial and moral ordeal for the couple and their children. As real estate brokers, we want our role to be to preserve everyone’s interests, in a peaceful manner.
We are always committed to providing our clients with the best of our expertise. In the case of a separation, we know how important it is to support our principals fairly and equally. We make sure to remain objective and neutral to achieve a successful transaction.
We surround ourselves with competent people who can provide our clients with the best advice (notary, tax specialist, asset management, mediator etc). It is very important to be well informed as the decisions made during a divorce can have significant consequences.
For these reasons we are part of Ex Libertas, an association dedicated to people affected by divorces.
