Divorce and mortgage

It might seem that nothing binds two people as much as joint financial obligations. However, there are times when even this aspect is not a sufficient argument for maintaining the relationship. The very decision to divorce can be very difficult, and when it comes to a joint loan for an apartment, more questions and doubts arise.

Important information in this case is the fact that for the bank that granted the loan, the divorce or separation of persons who have incurred a liability together does not matter. They are still joint and several co-borrowers for the financial institution.

Divorce and a housing loan agreement

As already mentioned, the divorce itself, but also the division of joint property - be it judicial or contractual - have no effect on the loan agreement. It applies in the same form as it existed before the separation. What's more, although a lot changes in life, the former spouses still remain joint and several debtors towards the bank. This means that each of them is still responsible for the repayment of the entire loan. The bank may demand it from both of them jointly, as well as from each separately, as permitted by Art. 366 par. 1 of the Civil Code.

However, there is such a thing as a debt assumption institution (Art. 519-525 of the Civil Code), which the spouses can always use, regardless of the provisions contained in the loan agreement. This is because they make an agreement in which one of them takes over the entire loan. It is perhaps not surprising that such a solution must be agreed by each of the borrowers, as well as the bank. After approval by the financial institution, an annex is attached to the loan agreement containing relevant provisions on the assumption of the liability by one person.

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It is also worth mentioning that in a situation where a court decision or an agreement on the division of property contains a provision according to which a flat or a house is awarded to one of the spouses, this does not mean that he also takes over liabilities to the bank. The principle of joint and several liability for debt to a financial institution still applies.

There may be a provision in a court decision or in an agreement on the division of property whereby one spouse is required to pay his debts and the other is relieved of that obligation. Such a provision is also not binding on the bank that granted the mortgage, but it gives the door to a person who, by a court decision, does not have to pay off the debt. In the event that the bank demands payment from her and the latter actually repays the liabilities, it may claim from the former spouse the amounts paid to the financial institution by way of a recourse claim. In the absence of voluntary payment by the ex-spouse as requested, it will be necessary to take a civil action in court.

Consequences of transferring the loan to one side

If the spouses decide to take advantage of the possibility of transferring the loan and enter into an agreement under which one of them will "take over" the repayment of the liability, the bank will check the creditworthiness of the person who will remain the borrower. In a situation where it turns out during the examination that disconnecting one party will significantly worsen the prospect of loan repayment, the bank may require additional collateral in the form of, for example, a mortgage on another property or the inclusion of another borrower. Otherwise, the loan agreement may be terminated in an extraordinary manner.

What if the loan is not transferable?

It may happen that the bank will not see the possibility of transferring the loan to one of the spouses. The reasons for such a decision may be different, but it is always irrevocable. So what remains in this case?

The spouses can sell the real estate being credited and repay the loan with the funds obtained from this transaction. However, this solution has its drawbacks. Firstly - it is necessary to consult the bank, and secondly - the property may have lost its value over the years of use and the amount obtained may turn out to be insufficient to pay off the obligation.

Another idea for people who are not dependent on the credited apartment or house may be to rent the property in question and use the income obtained in this way to repay the loan installments.

Divorce and credit under the "Rodzina na Swoim" program?

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If the loan was taken under the "Rodzina na Swoim" program, the divorce will not result in the loss of interest subsidies or the obligation to return the support already received. Similarly, transferring a loan and ownership of a flat or house to one of the borrowers will also not have such consequences.

In this topic, however, it should be remembered that the right to interest subsidies is granted only once. This means that people who used it during an ending marriage cannot apply for a preferential loan again (also as so-called singles).