Joint and Several Liability in Mortgage and Divorce: Discharge and Risks
In a divorce, the ex-partner often remains jointly and severally liable for the mortgage on the family home, even if they no longer live in the house. This can lead to financial risks, such as a claim from the bank if payments are not made. Fortunately, it is possible to have this liability discharged or limited. In this article, we explain how joint and several liability works, how you can apply for discharge, and what risks apply to you or your ex-partner.
What is joint and several liability in a mortgage?
In a mortgage loan, two or more persons are often jointly and severally liable. This means that the bank can approach all debtors for the full debt, even if one person no longer lives there. After a divorce, the ex-partner often remains jointly and severally liable, even if the property becomes the property of the other partner.
Example: Jan and Marja buy a house and take out a mortgage. After the divorce, Marja continues to live in the house, but Jan leaves. The bank keeps Jan jointly and severally liable for the mortgage. If Marja can no longer make the payments, the bank can also approach Jan for the full debt.
Legal basis
Joint and several liability in a mortgage is regulated in:
- Book 3 Civil Code (BW), Title 3.5 (Mortgage Law): Contains the rules on mortgages and liability.
- Book 7 BW, Title 7.1 (Divorce and Property Law): Regulates the consequences of divorce for property matters, including mortgages.
- Article 3:233 BW: Addresses the possibility of discharge from joint and several liability.
When do you remain jointly and severally liable?
After a divorce, you remain jointly and severally liable for the mortgage if:
- You entered into the mortgage together with your ex-partner and the bank has included both of you as debtors.
- You have not withdrawn from the mortgage agreement or informed the bank of your departure.
- The bank has not signed a new agreement limiting or lifting your liability.
What happens if you can no longer pay?
If your ex-partner can no longer pay the mortgage, the bank can:
- Directly approach you for the full debt, even if you no longer live in the house.
- Initiate a collection procedure, such as a payment order or enforcement order.
- Garnish your income to recover the debt.
- Seize and sell the property to cover the debt, even if you are no longer the owner.
Risks for your ex-partner
If you do not withdraw from the mortgage, your ex-partner faces risks such as:
- Financial burdens: If you can no longer pay, the bank can approach your ex-partner for the full debt.
- Damage to creditworthiness: If the mortgage is not paid, this can lead to bankruptcy or suspension of payments, which affects your ex-partner's creditworthiness.
- Loss of the home: If the bank sells the property, your ex-partner can lose the house, even if you no longer live there.
How can you apply for discharge from joint and several liability?
To withdraw from joint and several liability, you must submit a request for discharge to the bank. This can be done in various ways:
1. Agreement with the bank
The simplest way is to enter into a new mortgage agreement with the bank under which your liability is lifted. This can be done, for example, by:
- Entering into a new loan under which only your ex-partner acts as debtor.
- Arranging a refinancing under which your name is removed from the mortgage.
2. Request to the court
If the bank does not cooperate, you can submit a request for discharge to the court. This is regulated in art. 3:233 BW. The court may discharge you from joint and several liability if:
- You