No problem if you are well informed!
Who hasn’t heard a story like this? One partner invests for years in a property that is in the name of the other partner, the two separate and the one who paid has nothing to gain from it. To avoid the same fate happening to you, it’s best to take precautions before you buy and, if possible, get legal advice so that you are always on the safe side.
Couples without a marriage certificate – what to consider when buying real estate
If you want to buy a property as an unmarried couple, many agreements must be recorded in writing. Especially in conurbations, it can be worthwhile for a couple to purchase a property. In a relationship without a marriage certificate, however, such a project requires special protection, because in this case many pitfalls can lurk that need to be taken into account in the run-up to the purchase decision.
Today, for modern couples, only implementing the plan to buy their own home after marriage is no longer necessarily the order of choice. Often, one or both partners have already been divorced and are reluctant to remarry. But also – or especially because of – the currently very attractive low interest rates, the temptation is great to buy a property instead of just renting it. This is confirmed by many estate agents who are increasingly assisting unmarried couples in buying property.
As an unmarried couple, don't leave anything to coincidence when buying a property.
In the event of a separation, however, the purchase of real estate is usually the riskiest joint property for unmarried couples, which is why it can also spark the greatest dispute. It is therefore very important to make clear arrangements for the case of separation before the purchase of the property and to record them in writing. Appropriate provisions should also be made in the event that one of the two owners dies. Good legal advice ensures that the survivor does not lose the house if instalment payments can no longer be made on their own and that they continue to have a claim to the house.
According to the succession, the property of the deceased partner otherwise falls to the next of kin. In addition to direct relatives, these can of course also be a wife – who still exists on paper – and of course one’s own children from previous marriages or relationships.
Whether through death or separation – unmarried couples should clearly regulate what is to happen in such a case before buying a property. A partnership agreement that has been notarised provides a solid foundation.
Such a contract specifies, for example, who has contributed what share of the equity. It can also stipulate who is responsible for the repayment and how much, and who has to pay the property tax as well as electricity, water and refuse charges. It can also be determined who owns which parts of the inventory.
In such an arrangement, both partners are then entered in the land register as owners in their respective shares.
However, this procedure can also be disadvantageous. If, for example, one partner is able to redeem his or her share much more quickly through an inheritance, the ownership of the property changes. This would entail a change in the entry in the land register. This is associated with high costs, because land transfer tax is again due when the ownership structure changes. This currently amounts to 3.5 to 6.5 % of the property value (depending on the federal state).
To avoid the problems described above, an unmarried couple can also form a civil law partnership (GbR). When buying a property, the GbR is then entered in the land register as the owner and draws up a partnership agreement in which it is regulated which shares the partners own in the property and which payments they each have to make. It also determines what is to happen to the property in the event of a separation.
If, in this case, the ownership structure changes as described above, it is not necessary to change the land register, only the partnership agreement of the GbR is adjusted.
Another positive aspect is that a complete tax return does not have to be submitted every year for such a GbR. A supplementary sheet to the personal tax return documenting a “declaration for separate uniform determination” is sufficient here.
However, it is recommended to have both the formation of the GbR and any changes in the partnership agreement certified by a notary. This prevents disputes, in which it would otherwise have to be proven that both parties really agreed to the contractual clauses and the amendments.
However, neither the partnership agreement nor the formation of a GbR help when financing the property through a mortgage loan. Here, both partners are obliged to be fully liable for the loan. Banks usually insist on a joint loan, as they then still have access to the second debtor in the event of the default of one debtor. Therefore, it is highly recommended to put down in writing what is to happen in the event of a separation before taking out the mortgage loan. For example, it can be agreed that the property will be sold or that one partner will take over the property when the other partner is paid off.
A clear regulation prevents protracted disputes in the event of a dispute, at the end of which the property would have to be sold at auction.The sale of a property in the event of separation should also be well considered. Depending on the contract, the bank may charge high early repayment interest if the loan is repaid prematurely through a sale. Good alternatives can be a property loan with a shorter term and options for unscheduled repayments. A variable loan that can be repaid in full at the end of each quarter, for example, may also be a solution. However, this naturally exposes you to the risk of interest rate changes in long-term financing.