Repsol YPF

This personal conflict can become yet more acute in the event that the couple has signed a joint mortgage to pay for the property. What happens to the credit when a couple sharing a bank loan of this kind decides to separate? What happens to the property? Who assumes responsibility for the repayments? There are numerous possibilities. It all depends on each divorce settlement. Nevertheless, if both parties are registered as owners in the deeds and at the registry, the situation involves what is known as a jointly-owned property or a property which is held pro indiviso; in other words something that is physical and indivisible.

Obviously, since there are at least two owners of the same property they will both have rights over it. It may be that one of them wishes to keep the property and the other wants to sell it to a third party and take the money, for example.

The complication lies in reaching an agreement, but if this can be done it smoothes out the road considerably. A good solution is that one of the spouses sells their share to the other. In order to avoid problems, it is always advisable to carry out a prior valuation in order to establish a realistic, market price for the property. In this case, the person who is prepared to keep the house must pay their former spouse, deducting any outstanding mortgage repayments. Furthermore, they must pay the registry fees and, where necessary, the credit increase.

Once the legal formalities of the separation have begun, the couple will have to modify the financial arrangements of the marriage where this is subject to joint property. This change can be implemented by mutual consent through a legal document, the marriage settlement. In situations where there is a legal dispute it will be carried out through a binding legal ruling, the separation agreement. 

Proportion of repayments
Whilst the separation is not yet official, both spouses must continue to pay an equal share of the bills. 

If no agreement is reached, what is known as the "Actio Communi Dividendo" will apply, which involves bringing an ordinary court action, which according to the value of the property, will set out each party’s proportion of the repayments and, where necessary, order its sale.

If the latter circumstance transpires, the courts dissolve the joint property rights of the marriage and then orders the sale of the joint assets, after which both the possessions and debts are divided, including the mortgage.

However, this procedure, which can take a long time, may lead to the property being sold at a public auction having been seized by the bank which provided your mortgage. As such, as the well-known saying goes, in these matters "it is better to have a bad agreement than a good court case".

Meanwhile, it is quite common for divorce settlements to rule on what are known as the burdens of the marriage, which are composed of the sum of the estimated costs of meeting the family’s pace of life, taking into account the financial arrangement that existed until the separation. This settlement awards the property and credit to one of the parties.

Change of owner
From this moment onwards, one of the spouses will replace the loan. Then the process begins to change the ownership, in other words, the pertinent modifications will need to be communicated to the Land Registry. The deed will be amended to feature the only debtor and sole owner.

Single ownership should also be registered when one of the spouses buys the other’s share of the property they shared prior to the separation. This process involves costs similar to those incurred when you first take out a mortgage: opening fee, property valuation and registry fees for the modification of the deeds.