In the context of a divorce or separation, it is sometimes necessary to dissociate the mortgage. Here is how to separate from a real estate debt and manage the issue of property.
Separation, divorce: the subject of uncoupling
The credits subscribed as a couple can cause serious problems at the time of a separation because following the subscription of a mortgage by two borrowers leads to a solidarity of the debt. This solidarity goes well beyond marriage or PACS, that is to say that in the event of divorce or dissolution of PACS, former spouses are required to repay the mortgage together.
The solution is therefore to dissociate, that is to say that one of the spouses must withdraw from debtors to housing with the consent of his spouse and refuse his rights, including on the question of real estate. There are two steps to follow: dissociate yourself from the loan and redefine the ownership of the property.
The steps of a mortgage unbundling
Both spouses should ideally agree on the terms of the split in the mortgage and property concerned, whether a house or an apartment. We must already begin by deciding who will keep the property and will continue to repay the loan, if that is possible, of course. This allows one of the spouses to dissociate themselves from the debt, that is to say that it must follow the following steps:
- Write a written document stating the desire to dissociate from the mortgage and waive all rights to this financing
- Obtain an agreement from the co-borrower stating the takeover of the home loan principal
- Obtain an agreement from the bank accepting the separation, a study will be conducted to check if the borrower alone is able to repay the loan.
- Validate the dissociation by a notary, with the drafting of an authentic act
The separation will relieve one of the spouses of this obligation but having repaid for several months or years the credit, the latter may collect a portion of the value of the property, that his spouse will buy him back. This is called the redemption of cash.
Disconnection and redemption of the mortgage payment
If uncoupling is a first step, the redemption of balance will be the second. That is to say, the spouses are both designated as the owner of the property, but by separating from the debt, one of the spouses will also give up some of the value of the latter. To solve this aspect, the spouse who will continue to repay the credit will have to buy back the share of his ex-spouse, he must buy the balance.
The balance corresponds to the value of the property, taking into account the repayments already made and weighted by the number of borrowers. If the property is worth 200,000 USD and spouses have already repaid 100,000 USD, the amount of the balance will be 50% of this value, or 50,000 USD. To buy back a cash payment and continue to repay the current loan, it is advisable to proceed with a consolidation of credits.