Mortgage, Liability and Marriage
By Yolanda Bokhorst
You must be wondering: what’s the connection between the words in the title? I can assure you; more than you would expect. Allow me to explain.
Home – Mortgage
When you buy a house without having the amount of the purchase price, expenses and taxes in your bank account, you will need to arrange a loan with a bank. And because the bank does not necessarily have confidence in the fact that you will be able to repay your loan, they will ask for some form of surety – being a mortgage right on the house you will be buying. Furthermore, the bank will first thoroughly check your personal situation, such as: how much income you earn, whether you are married, what your career perspectives are, whether there are any other financial obligations, etc. Plus you will need a residence permit and a BSN (burgerservicenummer, or citizen service number – for tax purposes). If the bank decides to give you the green light, then you will be issued a mortgage loan. The civil law notary will draw up a mortgage deed, which will be signed at the same time as the transfer deed of the home.
Until now, nothing new.
‘Most banks require that both partners are liable for the mortgage debt’
What If You Are Married?
Often, married couples decide to buy a house together and to share the responsibility for the repayment of the mortgage. Their position, when it comes to ‘property’ and ‘debt’, is equal.
When one of the partners pays off more of the debt or invests more in the home, then this should be put in writing. After all, if you are both 50% owners, then you should contribute 50% to the expenses. If you don’t share the expenses in this way, then one partner ends up with a debt towards the other – which should be settled once the home is sold or the relationship is terminated. Particularly in the case of divorce, this type of situation can lead to conflict. The more you put in writing, the more you avoid this type of situation.
It is clear that if the home is put in the name of only one of the partners, while they are both liable for the mortgage debt, this can lead to a skewed situation. The ‘ownership’ is not shared, but the ‘debt’ is. More often than not, this is not what the partners had in mind.
In this context, I would like to point out that most banks require both partners to be liable for the debt. Should you want to arrange this differently, then be sure to bring this to the table as early as possible in the process. Make sure that the bank will agree to having the mortgage debt solely in the name of the person buying the home. This is of particular relevance if there is no community property between the partners.
Community Property or Not?
If you are married in community of property then, consequently, both the home and the mortgage debt could become part of the community, regardless of whether they are in name of one or both of the partners.
Until January 1, 2018, general community property was the norm when it came to the Dutch matrimonial property regime. As of that date, to all marriages entered into after that date, a regime of limited community property applies.
This can be avoided by entering into a prenuptial agreement. In order to ensure that third parties (such as the bank issuing the mortgage) are aware of this prenup, and therefore of the fact that there is no community of property, this prenup should be registered with the court.
Non-Dutch expats who live abroad, get married abroad and then move to the Netherlands (with or without a family), are – in most cases – not automatically covered by Dutch matrimonial property law. But – then which matrimonial property law applies? Does the foreign law also contain community of property or do the spouses retain their own property after marriage? Did the spouses draw up a prenup abroad? And how do third parties in the Netherlands – take, again, the bank issuing the mortgage – know what has been arranged pursuant to this foreign law?
MATRIMONIAL PROPERTY REGIME
‘Determining which law applies to your matrimonial property is often a complicated process, meaning that it can be quite time-consuming and costly’
Recently, in our practice, we have been receiving requests to issue a statement declaring which matrimonial property regime applies to the expat who is requesting a mortgage in the Netherlands. This is not a ‘copy-and-paste’ type of statement – to the contrary. Determining which law applies is often a complicated process, meaning that it can be quite time-consuming and costly. And once it has been determined which law this is, the Dutch civil law notary cannot make any statements regarding its contents. Advice will have to be sought abroad. In short, it takes time and money to provide the bank with clarity on the matrimonial property regime.
Something which you may not have once you initiate the mortgage negotiations…
Are you married and planning on buying a home in the Netherlands and requesting a mortgage? Then be sure to prepare for questions regarding your matrimonial property regime. Make sure you know which law and which regime apply.
How do you do this? By choosing an applicable law when drawing up a prenup. You can do this once you are married, but even better would be to do this before getting married. This will help you avoid a lot of problems.
In the Netherlands, the civil law notary draws up the prenup. A civil law notary who is specialized in international matrimonial property law can give you further advice on the matter. your doctors of these statements and to make sure that your wishes are respected as much as possible.
2514 AB The Hague
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Civil law notaries in international family law, corporate law and real estate law
- wills and guardianship
- marital and cohabitation contracts
- estate planning
- winding up estates
- corporate law matters
- property transfer and mortgage