Equity and buyout in divorce

How do you calculate the equity?

An example:

• Market value of home: €900,000
• Remaining mortgage: €300,000
  → Equity: €150,000

In the case of community of property, each person is entitled to €75,000.
If one of you wishes to take over the home, that amount must be paid out to the other, unless you agree otherwise in a prenuptial agreement.

Please note: investments using private assets or inheritances may involve reimbursement rights.
In many cases, the court assesses whether these amounts are included in the division.

What does buying out an ex-partner mean?

In a buyout, one partner takes over the home entirely and pays the other their share of the equity.
The bank assesses whether the remaining partner can afford the mortgage independently.

Important steps:

1. Have the property appraised.
2. Calculate the equity based on the reference date.
3. Determine which share belongs to whom.
4. Request bank approval for the mortgage takeover.
5. Record everything in a settlement agreement or notarial deed.

After the transfer, the notary re-registers the property with the Land Registry and the mortgage is adjusted.

Financing the buyout

In a buyout, a new or higher mortgage is often taken out.
The bank assesses income, expenses, and creditworthiness.
The buyout amount can be partially financed from the equity or savings.

In many cases, the notary advises recording all agreements in a deed of division.
Without bank approval, the departing partner remains jointly and severally liable for the old mortgage.

Step-by-step plan for equity and buyouts

1. Inventory

Map out the property value, mortgage, and any private investments.

2. Appraisal & reference date

Have the property appraised and determine the valuation date.

3. Calculating equity

Deduct the mortgage and any debts from the market value.

4. Buyout or sale

Discuss whether one of you will take over the home or if selling is better.

5. Recording & execution

Record agreements in a settlement agreement or notarial deed and execute them via the notary and mortgage lender.

Scenarios

Consultation

You determine together how the equity will be divided and record this in a settlement agreement.

Mediation

A mediator helps you reach agreements on valuation, buyouts, and payment terms.

Legal proceedings

If consultation is unsuccessful, the court can decide on valuation, division, and any reimbursement rights.

International

Is the property located in the Netherlands but one of you lives abroad?
In that case, Dutch law usually applies; the Dutch court has jurisdiction (Brussels II-ter).

Practical examples

1. Buyout with an additional mortgage
A client was able to keep the home thanks to a new mortgage. The buyout was recorded in a notarial deed and the ex-partner was released from liability.

2. Dispute over reference date
In another case, the property value rose significantly between the time of separation and the sale. The court chose the value on the date of sale because the parties had not agreed otherwise.

3. Reimbursement right after a gift
Part of the renovation was paid for from an inheritance with an exclusion clause. That amount fell outside the division and was repaid to the heir.