Property - Mortgage Payments

Question:

My wife and I are about to divorce. We have a small mortgage to pay off. What are our options ?

Answer:

You and your wife each have the right to purchase the other’s rights to the property by transferring all the mortgage loan into his/her name.

Question:

How can a couple split the ownership in their home and share the proceeds between them when there is still a large mortgage to pay off ?

Answer:

The remaining mortgage loan and any expenses associated with selling the property will be deducted from the proceeds of the sale and what is left will be divided between the parties. Examples of associated expenses are : penalties for early repayment of the mortgage loan , and linkage and interest on it ; bank’s legal fees if it took proceedings; fees for a real estate agent, property valuer, lawyer or receiver if their services were required.

Question:

Are a wife’s rights in the family home protected if the property is in the husband’s name only , and the bank tries to realise the mortgage after he defaults on repayments ?

Answer:

Firstly, in general a family home acquired during a couple’s marriage is joint property even if it is registered in only one spouse’s name .

Secondly, if the property is registered in one spouse’s name only but both of them take out a loan to purchase it, the other spouse must still sign on the mortgage deed for the bank to be entitled to actualise its right to all the property if the repayments are not met.

If a bank attempts to realise its mortgage on the whole property which is registered in one spouse’s name only, and it is discovered that the other spouse never signed the mortgage deed, then the action relating to the latter’s share of the rights will be invalid.

This was demonstrated by a case before the Tel Aviv District Court in October 2001 where the husband and wife both objected to the bank’s attempts to realise the mortgage relating to the loan taken out jointly on their apartment after the husband, in whose name the property was solely registered, defaulted on repayments. The wife claimed the pledge on the property was invalid because she had not been signed the mortgage deed – and had not even been asked to do so. Accepting her claims, the court ordered that the mortgage on her half-share of the property should be erased. It upheld the action in relation to the husband’s share of the property, rejecting his claims that he signed the mortgage deed without fully understanding the situation.

Question:

My husband and I bought an apartment after we got married which was registered in our joint names at the Land Registry . I paid approximately a third of the cost, using money I inherited. The remaining two thirds came from loans guaranteed by a mortgage taken out by my husband and myself, although the payments were actually made from my husband’s bank account. All the loans were repaid in full several years ago. My husband and I are now in the process of divorce. He claims that he is entitled to two thirds of the sale value of the apartment as he paid off the loans which accounted for two thirds of the cost. I feel that I should have two thirds as I used my inheritance money to pay a third of the cost of the apartment, and I am entitled to half of the remaining two thirds paid for by the loans my husband and I took out, that is a further third. Who is right, my husband or me ?

Answer:

Neither of you is right ! The fact that the apartment is registered in joint names at the Land Registry is the key factor here. Assuming that the apartment is registered in your names in equal parts it will normally be divided accordingly between both of you as spouses. The fact that one party used money gained as a gift or by way of inheritance and used this as part payment towards the purchase of the apartment does not act in his/her favour and give him/her greater rights in the apartment. Nor does the fact that the mortgage repayments were made from only one spouse’s bank account ( and not from a joint account, or from both parties’ accounts) , help that particular party gain more rights in the property either.

Case:

A few years ago my husband and I bought a house built on a plot of land. About a third of the money for buying the property came from the sale of an apartment my husband had before we married. About 2/3 of the money came from a mortgage loan we took out together. I have always worked outside the home. If we divorce, will I be entitled to part of the home which is registered in his name only?

Answer:

Yes – in this case a wife would be entitled to at least a third of the property, but she would also be responsible for half of the outstanding mortgage loan . As a third of the property was financed by the sale of property registered in her husband’s name only before their marriage, this will remain his.* The remaining two thirds is covered by the mortgage loan taken out jointly by the parties so that each will have a third ownership here. Accordingly, the wife will have rights to a third of the property and the husband two thirds. The unpaid mortgage loan will be the equal, and joint responsibility of the parties.

* Only in “long” marriages will the wife have any possibility of claiming half of the rights to property owned by the husband before they married.

Question:

My husband and I bought an apartment together with my mother-in-law. We are all new immigrants and put our rights to grants and mortgage loans together. We had no money to put down ,only our rights to grants. My husband has left me and it is impossible to remain in the apartment with my mother-in-law in these circumstances . We are all listed on the contract as buyers but nothing is said about the size of our shares. How can we end our partnership if we don’t know the size of our shares ?

Answer:

According to a case before the Tel Aviv Family Court in September 2002 the best solution for dividing up a property ‘bought’ this way is to do it in proportion to the value/size of each buyer’s grant. In the particular case the apartment ‘buyers’ were all Ethiopian immigrants, a married couple and the wife’s mother-in-law who had combined their eligibility grants to purchase an apartment together . After the wife’s sudden tragic death it was impossible for the sides to remain living together due to animosity and violence on the part of an adult son from the deceased’s first marriage and the sick, elderly mother-in-law moved out to live with other family. The court ordered the property sold and the division of ‘ownership’ according to the parties’ relative grant contributions which enabled the parties to transfer their eligibility to another property if they so wished within the required time.

Question :

When I married my husband ten years ago he already owned an apartment, having made a down-payment and taken out a mortgage. He continued paying the mortgage throughout our marriage. I am considering divorce. Will I have any rights in the apartment if we divorce ?

Answer:

Usually property owned by one partner prior to marriage remains that individual’s personal property and is not included in the pool of marital property to be divided between the parties upon divorce, because it is not considered the ‘fruit’ of their mutual effort . However, mortgage paid during the marriage from joint resources as a result of mutual effort will be taken into the account and the court will relate to the amount of repayments made in relation to the value of the apartment, when it divides or balances out marital property upon divorce. In other words, the paid-up part of the mortgage is joint property, so that the wife will be entitled to a sum equivalent to the half of the paid-up part of the mortgage in relation to the market value of the apartment

at the time of divorce. If, for example, the husband made a 60% down-payment on an apartment which was registered in his name before he married, and took out a mortgage for the remaining 40%, which he totally repaid during the marriage, then at the time of divorce, the wife will be entitled to 20% of the market value of the property (half of the paid-up mortgage).

Question:

Could a wife/mother end up being obliged to pay ongoing mortgage payments for the jointly-owned family home, after she rents separate accommodation for her and the children, even though the court has ordered the husband/father to pay the mortgage as part of a temporary maintenance decision ?

Answer:

Yes – as a result of decisions, temporary and final that the court may make on two different issues, of maintenance and property rights in the home !

Firstly, a temporary decision made by court need not be similar to its final judgment in the plea. A court has discretion to oblige a husband/father to pay ongoing mortgage payments, within a decision it makes on temporary maintenance. It is not acceptable for a court to burden the husband/father with the full load of the mortgage repayments, within a final judgment on maintenance. However, payment of the ongoing mortgage is likely to guarantee accommodation, indirectly, although the question of mortgage actually belongs to the property relations between the couple. In this connection, the obligation is a mutual obligation on both spouses. However, within the framework of a property plea, the court is allowed to order the couple to pay off the outstanding loan on the mortgage , each paying an equal part, and is not able to oblige one of them to pay off the entire unpaid loan by him/herself.