Joint and Several Liability in Mortgage and Divorce
In a mortgage, often two or more persons are jointly and severally liable, such as spouses who purchase a home together. In divorce, this liability generally remains, unless one of the parties obtains discharge from this obligation. This article explains what joint and several liability entails, how you can apply for discharge, and what risks your ex-partner faces.
What is joint and several liability in a mortgage?
In joint and several liability, all parties who have jointly entered into a mortgage loan are equally liable for the repayment of the debt. This means that the bank or lender can address any party individually for the full amount. In divorce, this liability remains, unless one of the parties is released.
Example: Suppose you and your ex-partner have taken out a mortgage of €300,000 together. In divorce, you both remain jointly and severally liable. If your ex-partner stops paying the mortgage, the bank can hold you liable for the full amount of €300,000. Even if your ex-partner received the property in the divorce.
Legal basis
Joint and several liability in mortgages is laid down in the Civil Code (BW), inter alia in:
- Article 3:266 BW: regulates joint and several liability for debts.
- Article 3:272 BW: provides for the possibility of discharge from joint and several liability.
- Article 3:273 BW: determines when discharge is not possible.
In addition, the Financial Supervision Act (Wft) is relevant, as mortgages fall under this act. Banks must provide clarity on the consequences of joint and several liability when concluding a loan.
How do I obtain discharge from joint and several liability?
To obtain discharge from joint and several liability, you must submit a written request to the bank or mortgage lender. This can be done via a discharge request or a indemnity agreement. The procedure is as follows:
- Apply for discharge: Send a letter to the bank requesting discharge from joint and several liability. Clearly state that you no longer wish to be liable for the mortgage.
- Bank's consent: The bank may refuse your request if you do not meet certain conditions. For example, the bank may require your ex-partner to take over the mortgage or that a new mortgage be taken out.
- Agreement with the ex-partner: If your ex-partner takes over the mortgage, ensure that they are financially capable of repaying the loan alone. A notary can assist in drawing up an indemnity agreement.
- Notarial deed: If the bank agrees, a notarial deed must be drawn up recording your discharge from joint and several liability. This deed must be registered with the Land Registry (Kadaster).
When can discharge be refused?
The bank may refuse your request for discharge if:
- Your ex-partner is not able to repay the mortgage alone.
- The mortgage has not yet been repaid and your ex-partner cannot obtain a new mortgage.
- The bank has no security that the mortgage will be fulfilled.
Attention! If the bank refuses your discharge, you remain jointly and severally liable. This can have consequences if your ex-partner does not pay the mortgage.
Risks for the ex-partner after discharge
If you obtain discharge from joint and several liability, your ex-partner remains solely liable for the mortgage. But what are the risks for your ex-partner?
| Risk | Explanation |
|---|---|
| Financial burden | If your ex-partner cannot pay the mortgage, the bank can seize the property. This can lead to a |