What happens to the shared home when a relationship breaks down?

Keytrade Bank logo

Keytrade Bank


Whether married or not: couples are breaking up faster nowadays than in the past. A relationship break-down unfortunately not only brings emotions, but also a list of practical things to sort out. Such as choosing what to do about the home where you both live. There are various different strategies.

> Rental apartment

In the case of a rental property, the lease contract can be terminated (check the notice period and termination fee), or taken over by one of the parties. In the latter case, a new lease contract may need to be drawn up, the departing partner removed from the lease contract, or a simple addendum might be added to the contract. (PS : any rent deposit must be released and new rent deposit must be re-established by the acquirer).

Legally cohabiting or married couples are automatically considered joint tenants, regardless of whether the lease contract was signed by just one person even if it pre-dates their commitment as a couple. For a couple who live together de facto, only the partner who signed the lease contract has rights and obligations towards the lessor.

> Property you own

Things get more complex when you own the property. There are four possible scenarios.

1. Sell

One of the most common solutions in the event of a relationship break is to sell the joint home. This can be a simple and honest way to share the cake, especially if you agree and neither of you wants or is able to take over the property. However, the sales process can take some time and there are multiple steps to follow.

First of all, you need to agree on the sale, the timing and the price for which the house will be listed. In addition, there are other issues that need to be resolved: will you sell it as it is, or will you redecorate it first to get a better price? Will you sell it yourself, use an estate agent or go for a public sale (for example using Biddit)? Who will handle the paperwork, who will talk to interested buyers and who will coordinate with the lawyers...? During this phase, it is important to communicate and make decisions jointly to avoid arguments.

Once the home is sold, the proceeds after deduction of any outstanding mortgage loan, taxes, reinvestment fee, termination fee and sales costs will be shared between you both. This distribution may be proportional to the initial investment, or as otherwise defined contractually based on your ownership rights. You might agree not to split the money evenly, for example, because one ex-partner paid for all of some renovations.


2. Buy out the ex-partner

Another solution is for one of you to take over the shared home by buying out the other. This scenario can be attractive if one of you has a strong connection to the home, or if it is the best option in practical terms, for example if children are involved and it is better for them to continue living in this familiar environment. However, a buyout scheme can be complex and financially challenging, and it also has a tax sting in its tail. A few things to consider:

  • Determining the value of the property

Before a sale takes place, the current market value of the property first has to be determined. This can best be done by an independent appraiser or expert. Obtaining an objective and accurate estimate is crucial to prevent future disputes. The current market value will also determine how much the acquiring partner needs to pay to the other party in order to buy out their share of the property.

  • Calculation of the buyout price

The buyout price is in principle half of the current value of the property, unless otherwise defined in the contract. It is important to first check how much each of you has contributed. Maybe one of you contributed more towards the purchase? Or perhaps just one of you paid for some specific renovation work? These are all things that can be added into the equation.

  • Mortgage loan and financing

A mortgage loan is often attached to a property you are buying. The ex-partner who takes over the home must also take over this burden alone. So he or she needs more than just sufficient funds to buy out the other partner. They also need to carry on with the mortgage payments.

If one of you takes over the home and the mortgage loan, a "transfer of equity" or "separation" must be requested from the lender. The ex-partner who is removed from the home loan is then no longer liable or responsible for repaying the debt.

Of course, the bank has to agree that one ex-partner will take over repaying the loan in full from now on. The bank will therefore first carry out a new assessment of whether the acquiring partner has the financial capacity to bear the loan alone. If the bank considers this to be too tight, it may propose rescheduling the loan so that it is repaid over a longer term (however, not at the initial interest rate but at the current prevailing interest rate). An alternative is to refinance by taking out a new loan.

If this is not possible either, the bank will continue to hold both of you jointly and severally liable and refuse the separation. In other words, you remain jointly responsible for repaying the home loan. You can then agree to sell the property or take a different approach (e.g. one person stays there and pays rent to the other).

  • The tax authorities also get involved

If an ex-partner becomes the full owner of the home, a distribution charge is payable. Because the distribution charge is usually due after a painful event, it is also known as the “misery tax”. It is a tax that you have to pay when you want to buy out your partner. In principle, it is the person who buys the home who pays the distribution charge. In Flanders, the distribution charge is 2.5% (or 1% for previously married couples or legal cohabitants who lived together for at least one year).

The charge applies to the agreed value of the property (the so-called ‘pro fisco’ value), and not the original purchase price. The ex-partner who buys out the other person therefore unfortunately also pays this charge on his or her “own share” that he or she already owned. In Wallonia and Brussels, the distribution charge is 1%.

  • Legal fees

The transfer is only valid and final after a legal deed, which regulates the reallocation of the home, has been signed. The notary's fee is calculated on half the value of the property.

  • What if you both want to take over the home?

It becomes more complicated if each of you wants to buy the other out. If you cannot reach an agreement, a court will decide. The judge will weigh up all the arguments. Suppose you have your professional practice at home, this could work in your favour. Or assume that your ex-partner will spend most of their time with the children, this may benefit them.

3. Letting

After a relationship breakup, renting out the shared home is also an option to consider. This can be a temporary solution if you either don't want to or can't decide on a sale or buy out right away, or if you are in a sluggish real estate market. Renting can help cover the mortgage payments while buying you time to consider your long-term decision carefully.

However, letting also requires careful consideration and agreement itself. You need to decide who will arrange the letting, how the rental income will be shared and what to do in the event of maintenance problems or tenant defaults.

4. Keeping the home in joint ownership

A fourth option is to keep the home in joint ownership. This means that you both remain joint owners of the home, and do not either split or sell it. This can work, for example, if you both want to continue a professional activity in the home. Or if you want the children to stay in the house and move in alternately each week, for example. The children can then continue to live in their familiar environment, which can provide stability during the transition period after the breakdown of a relationship. By keeping the property in joint ownership, you retain the flexibility to make a decision later, for example when the property market is more buoyant or your financial situation has improved.

It is advisable to seek legal support when drawing up any agreements concerning joint ownership. A notary can help to clearly establish ownership and ensure that all the arrangements are legally valid and enforceable. This can minimise any future arguments or uncertainties.

Looking for a (modified) home loan?

Simulate your home loan free of charge and without obligation

This article does not contain any investment advice or recommendation, nor a financial analysis. Nothing in this article may be construed as information with a contractual value of any sort whatsoever. This article is intended for information only and does not constitute in any way a commercialization of financial products. Keytrade Bank cannot be held liable for any decision made based on the information contained in this article, nor for its use by third parties. Every investment entails risks such as a possible loss of capital. Before investing in financial instruments, please inform yourself properly and read carefully the document "Overview of the principal characteristics and risks of financial instruments" that you can find in the Document centre.

Other articles that might interest you