Mortgages in the Event of Divorce
Disagreements between couples are skyrocketing. Divorce rates in Spain have risen to levels not seen in recent years. According to the Spanish National Institute of Statistics, there were 90,582 marital breakups this year, including annulments, separations, and divorces.
The figures cited do not focus solely on the capital but are spread across all of Spain’s autonomous communities. The main issue, from a legal standpoint, is not simply a breakdown of the marriage due to incompatibility between the spouses. The situation becomes more complicated when there are assets in the marital community and an outstanding mortgage to be paid off.
Who pays off the mortgage in a divorce?
The general rule regarding mortgages in divorce cases is that the former spouses remain obligated to make the monthly payments. They must continue to make these payments to the respective bank in the same manner as before. The bank is authorized to require both account holders to fulfill their obligations.
It is important to note that borrowers who took out the loan and still own the home will remain liable for their obligations. This liability applies regardless of whether they are married or divorced. In any case, Those who have made a commitment are legally obligated to pay.
However, it is important to make a number of preliminary observations to determine whether this payment obligation can be assumed by only one of the spouses. In this regard, the following points should be noted:
1. Joint mortgage
Once the mortgage has been taken out by the couple, they may agree in the division of property which of them will assume full responsibility for the obligation. Consequently, that person will be responsible for the monthly payments and, at the end of the term, will be required to have the mortgage discharged.
Furthermore, for strictly banking purposes, the necessary amendments will be made to the contract, beginning with the replacement of one of the contracting parties. The bank will require the obligor to provide a guarantee to ensure their ability to pay, and will also charge a fee and the property appraisal.
2. Single-name mortgage
If the home is registered in the name of only one spouse, the matrimonial property regime and the use to be made of the property must be taken into account. If separate property is chosen, the house belongs to the person who purchased it and is still paying it off. If the community property regime is chosen, the situation is different.
In this case, the mortgage will be in the owner’s name as long as the property serves as their primary residence, regardless of how it is used. For this reason, it is possible for someone who does not use the property to assume the obligation to make payments.
3. Mortgage, Divorce, and Children
If this situation arises, everything changes completely, as the couple’s children will be placed in the care of the parent who is granted custody. The use of the home and the mortgage will be legally affected. As a general rule of law, minor children will remain in the home with the custodial parent.
For this reason, it is important to note that the homeowner is responsible for paying the monthly mortgage payments, regardless of whether or not they live in the property.
4. Other possible alternatives
If the former spouses so choose, they may ask the competent court to determine who will retain ownership of the property and be responsible for paying the mortgage. Similarly, they may opt for a mediation a mutual agreement setting forth the sale of the property and the subsequent payoff of the mortgage.
