When a couple divorces and there's a house bought with a mortgage, one of the first questions is also one of the most urgent: who is responsible for the mortgage payments while the division of assets isn't resolved? The question may seem simple, but the answer involves two different realities: the relationship between the ex-spouses and the relationship with the bank.
For the bank, the rule is clear: the people who signed the mortgage contract remain responsible. This means that if the loan is in both spouses' names, both remain obligated to pay the instalments, even if only one continues to live in the house, even if divorce has already been decreed, and even if there is a future intention of property division.
Divorce does not automatically alter a bank contract. Division is also not presumed. Until there is a sale of the property, settlement of the loan, assumption of the debt by one of the ex-spouses with the bank's acceptance, or another formal change, the payment continues to be a contractual responsibility of whoever is jointly liable for the credit.
In this article, we explain who pays the mortgage instalment while the property division is pending, what happens when only one person lives in the house, how to avoid conflicts, what rules should be put in writing, and what risks exist when the situation drags on without a resolution.
Does a divorce not erase a mortgage?
Divorce ends a marriage, but does not automatically extinguish debts incurred to third parties. The bank is not bound solely because the ex-spouses agreed between themselves that one of them would take over the instalment payments.
If the mortgage contract was signed by both parties, both remain liable to the banking institution until there is a change accepted by the bank. This is essential for understanding the difference between “keeping the house” and “keeping the debt”.
A divorce agreement can stipulate that one ex-spouse remains residing in the property and takes on the monthly mortgage payments. However, if the bank does not remove the other loan holder, that other ex-spouse continues to be liable to the financial institution.
In practice, this means that if the instalment stops being paid, the bank can demand payment from both credit holders.
To delve deeper into this subject, you can consult Mortgage and divorce.
Who pays the instalments while the inheritance is being settled?
While the division has not been settled, the instalment must be paid by whoever is obliged in the credit agreement. If both ex-spouses are borrowers, both continue to be responsible to the bank.
However, among ex-spouses, there can be a different internal arrangement. For example, if only one remains living in the house, it can be agreed that this person covers the mortgage during the transitional period. This agreement can make sense when the other ex-spouse has already left the property and is not deriving any direct benefit from the housing.
Still, this understanding should be put in writing. Without a clear document, discussions may arise as to whether the payments were a normal contribution, compensation for the use of the house, an advance to be considered in the division, or an obligation undertaken without the right to reimbursement.
The ideal outcome is that the agreement indicates:
Who pays the monthly instalment?;
Who pays for credit-related insurance?;
who supports condominium fees, IMI (property tax) and maintenance costs;
whether the amounts paid will be offset in the settlement;
What is the deadline for selling the property or completing the foreclosure?;
What happens if the bank refuses the exit of one of the account holders.
The absence of these rules transforms a provisional situation into a permanent hotspot of conflict.
What if only one of the ex-spouses lives in the house?
When only one of the ex-spouses remains in the house, a sensitive question arises: is it fair for both to continue paying the mortgage?
From the bank's perspective, the answer remains the same: if both are on the contract, both remain liable. From an internal perspective, between the ex-spouses, it may make sense for the person exclusively using the house to bear the mortgage payments or, at least, a larger portion of the costs.
However, this depends on the specific situation. The provision of credit is not just a right to use. It also corresponds to the payment of a debt associated with an asset that can continue to belong to both. Therefore, it is not always correct to say that the person living in the house should pay everything without any subsequent settlement.
There are situations where payments made by one of the ex-spouses must be taken into account in the division of assets. In others, they may be considered compensation for the exclusive use of the house. Everything depends on the matrimonial property regime, the existing agreement, the ownership of the property, the value of the debt, and the circumstances of the separation.
To better frame the topic of family housing, you can consult Family home in divorce.
Home use and property are not the same thing
A common mistake is to confuse who lives in the house with who owns the house. The attribution of the use of the family home does not automatically resolve the ownership of the property, nor the debt to the bank.
A person may be allowed to live in the house temporarily by agreement or court order, but this does not mean that the house is exclusively theirs. Likewise, the fact that an ex-spouse leaves the property does not mean they have ceased to be an owner or debtor.
This is why, while the shareholding is not yet complete, three issues must be separated:
Who can use the house;
Who owns the property;
Who is responsible for the mortgage.
These three answers may not match. And when they don't match, everything needs to be regulated with particular care.
If the temporary use of the dwelling is involved, it may be useful to consult Provisional attribution of the family home.
The risk of letting the situation drag on
While the division is not resolved, it is common for ex-spouses to postpone difficult decisions. The house is left “for later”, the mortgage is paid by one or both, and no one clarifies the fate of the property.
This postponement may seem practical at first, but it carries significant risks.
The first risk is financial. If the instalment is not paid, both holders can be in default with the bank. This can affect their banking history, make it difficult to get new loans and create additional debt.
The second risk is financial. Those who pay alone for months or years may feel they are bearing an unfair burden. Those who don't pay may claim that they are not using the house either. Without a written agreement, the discussion becomes more difficult.
The third risk is emotional. The house keeps ex-spouses tied to a financial relationship that prolongs conflict and prevents a true fresh start.
Therefore, the provision should not be treated as a secondary matter. It is a central piece of the sharing.
Can the instalment be offset in the division?
It can, depending on the circumstances. When one of the ex-spouses pays instalments on the loan after the separation, it can be discussed whether these amounts should be considered at the time of the division of assets.
Compensation may make sense when the payment benefited the common estate, reduced the property's debt, and was borne solely by one party. However, there may also be arguments to the contrary if that same person was exclusively using the house.
This is where the analysis becomes more delicate. If a person pays the mortgage but also lives alone in the property, there may be a kind of balance between the burden borne and the advantage gained. If, on the other hand, they pay the instalment without living in the house, there may be a stronger basis for requesting an adjustment.
Each case must be analysed with documents:
bank statements;
proof of payments made;
Value of amortised capital;
date of separation;
effective use of the house;
written agreement between the ex-spouses;
expenses borne by each.
The longer this goes on without an agreement, the more difficult it will be to reconstruct all the payments and justify compensation.
What happens if you stop paying?
If the loan is in both names and one stops contributing, the bank can continue to demand payments from both. From the financial institution's perspective, internal conflict, separation, or disputes over division are irrelevant. What counts is the contract.
Then, the ex-spouse who paid more than their share may try to settle accounts with the other, according to the applicable legal framework. However, this settlement is between the ex-spouses. It does not prevent the bank from demanding payment.
Therefore, responding to non-compliance with further non-compliance is risky. If payment is not made, both parties could suffer consequences.
The most prudent solution is to document the failure, communicate it in writing, seek agreement, and, if necessary, take the matter for sharing or to the appropriate process.
Is it possible to make the other person pay half?
It depends. If both are jointly liable for the loan, there is responsibility to the bank. However, between the ex-spouses, the internal division can depend on the marital property regime, the use of the house, any existing agreement, and the stage of the proceedings.
When there is a written agreement, it is simpler to enforce its compliance. When there isn't one, it will be necessary to demonstrate the reason why the other party should contribute and to what extent.
In many cases, the discussion about who should pay the instalment while the division is unresolved is handled within the scope of the asset division itself or the inventory. Credits, debts, payments made, and any potential compensations can be analysed there.
To understand this path better, you can consult Inventory process.
What if an ex-spouse wants to keep the house?
If one of the ex-spouses wishes to keep the house, they must simultaneously address three points: ownership, debt, and compensation to the other.
It is not enough to say you are keeping the property. It is necessary to know if you can take on the mortgage alone, if the bank agrees to remove the other holder, and if there is a requirement for a buyout payment.
In simple terms, buyouts correspond to the value that may be owed to the ex-spouse who stops holding their share in the property. The calculation depends on the value of the house, the outstanding debt, the matrimonial property regime, and other relevant factors.
When there is a mortgage, the departure of one of the joint holders depends on bank approval. The bank will assess income, debt-to-income ratio, risk, and guarantees. If they do not accept the detachment, the ex-spouse leaving the property may remain tied to the loan.
To delve deeper into this subject, you can consult Can I buy the other part of the house in the divorce? e removing a spouse from a loan in divorce.
What if the best solution is to sell the house?
When neither ex-spouse can take on the mortgage alone, or when the bank does not agree to one holder being removed, a sale can be the safest solution.
The sale allows for the settlement of the loan, the cancellation of the mortgage, and the division of any remaining value, if applicable, according to ownership and the matrimonial property regime. It also allows for the cutting of the financial tie between the ex-spouses, preventing one from remaining dependent on the other's behaviour.
The sale can be particularly recommended when:
The instalment is too heavy.;
there is a risk of default;
There is no agreement on who gets the house.;
The bank refuses the uncoupling;
none can pay off debts;
Home repairs prolong the conflict.
Naturally, selling can also be emotionally difficult, especially when there are young children. However, a house that is no longer financially sustainable can become a bigger problem than the separation itself.
To develop this theme, consult Sale of property after divorce.
Instalment, insurance, residents' association fees and IMI
The monthly instalment is the most visible cost, but it's not the only one. While the agreement isn't finalised, there are still expenses associated with the property.
Among them may be:
credit-linked life insurance;
All-risks insurance;
Condominium;
IMI;
urgent works;
maintenance;
Bank charges;
Fees or renegotiation costs.
If it is only decided who pays the instalment, but nothing is said about these expenses, the conflict can continue. A well-prepared agreement should foresee all the household charges, not just the bank's monthly payment.
When there are insurances associated with the loan, it is important to understand who is insured, who pays the premium, and what happens if one of the joint borrowers leaves the credit agreement. For further context, you can consult Your life insurance policy for the loan will typically remain active even after a divorce. However, what happens to it and who is responsible for it can change depending on the terms of your divorce settlement..
How should a provisional agreement regarding payment be made?
While the division of assets is not yet finalized, it can be helpful to reach a provisional agreement. This agreement does not replace the final division, but it helps to avoid defaults and disputes.
The agreement must be clear and practical. It should indicate who pays, how much they pay, from when, until when, and what the future consequences will be.
A good provisional agreement should include:
Property identification;
Identification of the credit agreement;
approximate installment amount;
Who pays the instalment?;
who pays for insurance, condo fees, and taxes;
whether the amounts paid will be offset in the settlement;
deadline for requesting a property appraisal;
deadline for contacting the bank;
consequence if the disassociation is refused;
possibility of sale if the situation is not resolved.
The goal is to avoid vague phrases like "one person will pay for the house" or "we'll settle accounts later." In a divorce, the vaguer the clause, the greater the risk of litigation.
The role of property division
The division of assets serves to divide common property and resolve the ownership of assets and debts. When there is a house with a mortgage, the division must address both the house and the debt together.
It makes no sense to award the property to a former spouse and leave the debt unresolved. It is also unwise to keep both parties in debt without a deadline, a plan, or any prospect of a sale.
In the division of assets, it can be agreed that:
The house is sold;
A former spouse keeps the house and pays compensation;
A former spouse assumes the loan, with the bank's approval;
Payments made up to the division of assets are offset;
Common expenses are settled;
There is a deadline for bank regularization.
For an overview of this topic, see division of assets in divorce e Divorce with joint assets.
Common errors while the sharing issue is not resolved.
There are mistakes that are repeated in many divorces and that can have lasting consequences.
The most common are:
to think that divorce automatically removes a credit holder;
to stop paying the installment due to rebellion;
allow just one person to pay for everything without any registration;
to remain in a shared home for years without an agreement;
confuse use of the house with ownership;
Forget about insurance, condo fees, and taxes;
Signing vague agreements regarding the service provision;
not requesting formal authorization from the bank;
To assume that "it will be resolved later" without setting a deadline.
The mortgage payment should be handled rigorously from the outset. Otherwise, the property dispute may extend far beyond the end of the marriage.
What to do if there is no agreement?
When there is no agreement on who will pay the installment, the priority should be to avoid defaulting on payments to the bank. Failure to pay can harm both parties.
Next, the necessary documentation must be gathered:
credit agreement;
deed or document of acquisition;
property certificate;
Proof of payments made;
bank statements;
Proof of insurance, property tax (IMI), and condominium fees;
Communications between former spouses;
eventual decision regarding the use of the house.
With this information, it can be assessed whether a provisional agreement should be requested, a decision made regarding the family home, an inventory, the sale of the property, or another solution.
When there is intense conflict, legal action may be necessary to prevent the home from becoming an instrument of pressure.
Conclusion
Until the division of assets is resolved, responsibility for the mortgage payments continues, primarily according to the mortgage contract. If the loan is in the name of both ex-spouses, both remain responsible to the bank until a formal change is accepted by the financial institution.
Between ex-spouses, it can be agreed that only one pays temporarily, especially if that person is the one using the house. But this agreement must be in writing, clear, and aligned with the future division of assets. Otherwise, disputes may arise regarding reimbursements, compensation, exclusive use of the property, and non-compliance.
The most prudent rule is simple: don't leave mortgage payments to informality. Who pays, why, until when, and what impact will it have on the division of assets are questions that should be answered before the problem grows.
If the division of assets is not yet resolved and there is a joint mortgage, you can consult a... Solicitor For legal guidance. A house can be a valuable asset, but a poorly managed mortgage payment can turn that asset into an endless shared debt.
