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Property in sole ownership – Internal arrangements under a matrimonial property regime govern the equalisation of accrued gains in the case of joint debts

In a marriage, the spouse who has generated more accrued gains than the other has to pay the other spouse half of the difference. Yet, what happens if a property is owned solely by one spouse but the loan agreement was jointly entered into by both spouses? The Federal Court of Justice (Bundesgerichtshof, BGH) had to decide on this issue.

Many couples jointly acquire a plot of land or purchase a property and also jointly enter into loan commitments. A simple case under the matrimonial property regime - the final net assets of each partner would consist of half the value of the property minus half the debts. In this respect, the accrued gains would be at the same level and the partners would “only” have to agree what they should do with the property.

If the property is owned by just one of the partners but the loan agreement was entered into jointly by both spouses then the property would be assigned to the final net assets of the respective spouse, however, both spouses would have to be liable for the debts vis à vis the bank.

The BGH, in its ruling from 6.11.2019 (case reference: XII ZB 311/18) based the compensation in this case on the internal arrangements. For the purpose of dividing up the matrimonial property the debts should be treated as belonging to the partner who is the sole owner of the property. The debts would not be taken into account for the other partner in terms of the matrimonial property regime. Subsequently, half of the difference between the value of the property and the loan value would then be paid in order to equalise the accrued gains.

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