Elementor #6767
During a separation or divorce, it’s the division of property agreement that marks the end of your financial relationship and clarifies who gets what after you’ve divided everything between yourselves. Often, the bank requires a division of property agreement so that each of you can separately apply for new mortgages for your respective homes.
Here you’ll find tips on how to easily handle property division if you’ve been married or living together. There are significant differences between the two situations. For married couples, essentially all property must be divided in a property division agreement. For cohabitants, it’s only your shared residence and items like furniture, electronics, etc., bought for joint use.
Why should I write a property division agreement?
If you don’t create and sign a property division agreement, you have the right to demand property division and assets from each other several years after the divorce (cohabitants up to one year after separation). Once you’ve signed the property division agreement, neither of you can demand any property or compensation from the other, and you terminate all your financial ties.
Furthermore:
• Before taking out new mortgages, the bank wants the property division agreement.
• If you buy a new condominium, the condominium association wants to see the signed property division agreement.
• If you buy a new house or land, the land registry wants to see the signed property division agreement.
Property division if you were married
Property division during divorce is important, and it’s a formal written agreement between you two that separates you and is required for the property division to be valid. Remember to do the property division shortly after the divorce because the opportunity to demand property division otherwise remains for a long time after you’ve separated.
It’s important to consider things like who gets the car, the boat, the cat, and especially the home. If one of you is taking over a home with a mortgage, it’s important to first check with your bank if the spouse who wants to stay actually qualifies to take over the loans.
A property division agreement should always be drawn up in connection with a divorce, but no earlier than the day after the divorce application has been submitted to the district court, and it should be drawn up in two identical copies – the two separating parties should each have a copy. By quickly agreeing on how you’ll distribute belongings and money between yourselves, you reduce the risk of potential disputes over finances also leading to arguments and conflicts over the children.
Once both of you have signed the property division agreement, it’s legally binding and practically impossible to revoke or amend. Therefore, carefully go through the agreement and ensure that you fully understand the meaning and consequences of the agreement before signing.
Property division if you were cohabitants
Only the residence and household goods (furniture, electronics, kitchenware, etc.) purchased for joint use during the time you lived together are included in a property division agreement. Items owned before you moved in together are not counted. Remember to draft a property division agreement shortly after the separation. The sooner you agree on property division, the less risk of disagreements affecting the children. As a cohabitant, you have the right to demand property division for up to one year after you and your partner have separated.
Here’s how you do the property division:
1. You list everything you own such as a car, stocks, savings account, and their values. Clothes, gifts, and other personal belongings of lesser value don’t need to be listed. They’re yours. If you’ve been cohabitants, you only list what you own as joint property (residence or household goods purchased for joint use).
2. Your partner lists everything they own under the same conditions as you. Valuable hobby items are included in the property division if you were married.
3. You deduct your debts. All debts if you were married and only debts related to joint property if you were cohabitants.
4. Separate property is not included.
5. Add up both your totals and divide the amount by 2. So, you split the surplus, not any debts or loans. After dividing the property between you, both should have received property or cash of equal value.
6. Then, you decide who gets what. The general rule is that the owner of any property has “first dibs,” but the other party is entitled to half the value. If one of you receives property worth more than the other, the other spouse is entitled to half the difference in what’s called a property division payment (usually money).
