Bank wants co-ownership of the property - experiences?

2023-08-11 08:29:14

I am shocked that the woman goes along with this. She probably doesn’t have a good overview of her own finances if she voluntarily gives an interest-free loan to the man by her side and hopes that, in the event of a separation, she at least gets this money back - or she has so much that she doesn’t care.

(What actually happens if, for whatever reason, the value of the house decreases and he can no longer repay what she invested?)

On top of that, she also lives there. That means she will very likely also: clean, maintain, design, take care of it. That also contributes to preserving the value. How is that compensated in the event of a separation?

If children then come along and she can contribute less financially during parental leave, but instead takes on the tasks of a cook, housekeeper, nanny, and other matters around the house for free, it becomes really bad.

Such arrangements are one of the reasons why so many women end up in old-age poverty: their own money is good-naturedly invested interest-free in the man’s house, without real security.

2023-08-11 08:51:38

If I understand correctly, the loan is somehow about 40% of the house construction sum and the land is already paid for (which can make a big difference depending on where you live). So let's say the land was cheap and we somehow have something like a 30% loan-to-value ratio (probably less, because the land makes up more). If the partner participates half in the loan, that's about 15% participation in the total costs? As I said, depending on the land possibly even significantly less (if the land is as expensive as the house, which definitely happens in some regions, then we are at 10%). I can somewhat understand if at first one thought "we'll sort that out otherwise" or she rather counts it as "that's just my rent."

Otherwise, I wondered if there could generally be difficulties for the bank if you are equal co-borrowers on the loan but the collateral belongs to only one of you. So effectively, for your partner, "there's nothing to get." I mean ultimately the land charge will be registered, so maybe not that relevant, but I was wondering if there could somehow be difficulties. (No idea)

2023-08-11 10:16:32

One more thing that is bad about the repayment option aside from the depreciation: she co-signs, so she is liable alone not for half the amount but for the whole. If he runs off and is no longer reachable, the bank wants everything from her. And not just the half she would get repaid. This risk is enormous; she is fully liable for a loan on something that belongs to her 0%. Finance alone, some bank will go along with it (you can also give rough numbers) and she pays half the interest + half the ancillary costs + 100€. Both are off the hook there.

2023-08-11 10:33:29

If I understand this correctly, the loan is somehow about 40% of the house construction cost and the land is already paid for (which depending on where you live can make quite a difference). So let's say the land was cheap and we somehow have something like a 30% loan-to-value ratio (probably less, because the land makes up more). If the partner participates half in the loan, that's about 15% participation in the total costs? As I said, depending on the land possibly significantly less (if the land is as expensive as the house, which certainly happens in some regions, then we're at 10%). I can somewhat understand if someone initially thought "we'll sort that out another way" or she considered it more like "that's just my rent."

Otherwise, I wondered if there could generally be difficulties for the bank if you stand equally in the loan but the securities belong only to one of the two persons. So effectively, for your partner, there's "nothing to get." I mean, ultimately the land charge is registered, so maybe it's not that relevant, but I was wondering if there could be some difficulties with that. (No idea)

I thought that too, but if the specific numbers were about relatively small amounts, why would he want to involve her in the loan agreement at all? If he really had both the land AND 60% equity from the construction value, then he wouldn't need the partner as relevant security? I had assumed that the 60% already includes the land.
Be that as it may, in regions where land is expensive, the buildings are also expensive. Even 40% can still be a lot of money there. Significantly more than I would take on as a loan that is not secured.

2023-08-11 10:41:15

Otherwise, I wondered if there might generally be difficulties for the bank if you are jointly liable for the loan, but the collateral belongs only to one of the two persons. So effectively, there is "nothing to obtain" from your partner. I mean, ultimately the land charge is registered, so maybe not that relevant, but I was wondering if there could somehow be difficulties. (No idea)

No. Legally, this is completely clean and there are no difficulties at all. Morally okay? That's another question and to be settled between the borrowers; the bank is out of it.

In any case, in regions where the properties are expensive, the buildings are also expensive. Even 40% can still be a lot of money there. Significantly more than I would take on as a loan that is not secured.

If the property was worth T€ 450 instead of T€ 150, the construction costs would not triple. They remain roughly the same or maybe 5% higher. Then the question would all the more arise as to what the partner would be liable for if the equity contribution is already exorbitantly high just for the property.

2023-08-11 11:51:49

Reason: otherwise the partner would be disadvantaged.

I would like to agree contractually that the money paid in by her is paid out to her in the event of divorce.

Are you married or not? If you are married, the ownership status in the land register is financially irrelevant. In the case of divorce, only the respective initial assets and final assets count. The difference is balanced out. This also perfectly takes into account who brought how much money and property into the marriage beforehand. I still consider the community of accrued gains to be extremely fair. The only difference with the land register is that in the event of separation it is very easy to determine who gets to keep the house and, of course, who has to pay out. You could even register the wife at 100% there. That would also be great to minimize divorce disputes. The only catch is: without registration in the land register, you can be taken advantage of in the event of separation if the value of the house is underhandedly reduced. You then give up many options for action.

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Bank wants co-ownership of the property - experiences?

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