Many people don't want to use leverage to buy real estate. They do not know who the owner of the apartment with a mortgage is - the borrower or the bank. It is believed that the home belongs to the creditors until the debt is repaid. But this is not an entirely correct statement: the buyer is the owner of the apartment, but his ownership rights are limited. All restrictions are specified in the loan agreement.
List of restrictions on the right to use
According to Federal Law No. 102 of July 16, 1998 “On Mortgage,” when purchasing real estate with a mortgage, the borrower agrees to the restriction of ownership rights. Without the bank's consent, he will not be able to:
- sell residential premises;
- make a redevelopment;
- register unauthorized persons at the place of residence.
The listed restrictions do not mean a complete ban on these transactions. They are possible subject to compliance with the bank's conditions. If the organization is not sure of the return of the borrowed funds, it may refuse the owner of the mortgaged apartment his application.
Who can be registered
The borrower and his immediate relatives will not have any difficulties registering for mortgage housing. The procedure will not differ much from registration in an apartment purchased without borrowed funds. But it will not be possible to register distant relatives or a stranger in a mortgaged home.
Advice! The agreement contains a clause according to which the borrower does not have the right to register other persons without the approval of the bank. However, in practice, most mortgage homeowners ignore this clause. But to avoid misunderstandings with the bank, it is better to write a corresponding statement.
When an apartment with a mortgage is not divided equally
This is possible if one party made payments in excess of the amount established by the agreement and these funds were personal. In this case, the court may increase the share in the apartment if the borrower can provide evidence that this money was indeed personal and not jointly acquired.
An apartment purchased with maternal capital will also not be divided equally. Part of the apartment, paid for by maternal capital, will be divided between parents and children. The remaining part is between spouses (possibly already ex-spouses). For example, a family with one child paid 10% of the cost of the apartment with maternity capital. This 10% will be divided among the three, the remaining 90% will be divided between the parents.
Is it possible to rent out the property?
The owner can rent out residential premises, but with the approval of the bank. However, not all lenders approve of this idea. If the borrower becomes insolvent, then the apartment will become the property of the bank. But it will be more difficult to sell if there are tenants who have paid rent in advance and signed a contract.
The lender will not be able to evict them until the contract expires. But if the borrower plans to rent out the property on a yearly basis with the possibility of extension, the bank may give its consent. Lenders will not have to wait several years to sell the apartment and get their funds back.
When is it better to take out a mortgage - before or after marriage?
The buyer of the apartment is formally considered the owner of the property. However, housing taken on a mortgage often becomes the subject of disputes between spouses. If the owner bought an apartment before the official registration of the marriage, then upon its dissolution it remains with him. If the spouse was able to prove participation in the payments, the court will allocate him a share in the residential premises. Its size will be equal to the number of payments.
Therefore, when paying off mortgage debt, it is important to follow the following recommendations:
- the owner must personally make payments. If a spouse makes a payment from his personal account, this may become a reason to dispute the apartment;
- If the spouses have entered into an oral agreement to divide the mortgage, payments should be made from personal accounts. Otherwise, you won’t be able to prove your participation in repaying the loan.
Therefore, lawyers advise drawing up a written contract. You should also save all receipts that you can use as proof of payment. If a minor child is registered in the apartment, the court will allocate a larger share to the parent with whom he will remain.
How is an apartment purchased with a mortgage before marriage divided?
In most cases, no way.
For example, if you just live together without signing, and decide to take out a mortgage, do it only together, as co-borrowers with shares in the property determined. Because if your partner offers to register everything in his name “because it’s easier” - in the future, even if you get married and then divorced, everything will really be simpler: the apartment will belong only to your partner, and you will not have any money for it no rights.
But, of course, there are nuances.
Another situation is if one of the parties to the wedding invested money in a new building at the excavation or construction stage (if officially: concluded an agreement on the assignment of claims or shared construction). Then you got married, construction was completed, you received an apartment - and ownership rights arose after the wedding, so in court such an apartment can be recognized as joint property.
Another option: before the wedding, a ready-made apartment is purchased (donated, inherited), i.e. it belongs to one owner and is not common. But if during the marriage the property was improved so much that it significantly increased its value (for example, you made major repairs), there is a chance that the court will recognize the property as community property. At least this possibility is indicated in Article 37 of the Family Code.
The most convenient option is when the future husband and wife take out a mortgage for the apartment as co-borrowers, pay together and receive their shares as individual property.
Can a co-borrower become an owner?
Often, a buyer will take out a mortgage with a trustee to increase income and gain bank approval. A co-borrower may be a person who is not a relative of the buyer. Usually this becomes the second spouse, parents or adult child.
The borrower and co-borrower are equally responsible to the bank, so they can count on equal shares in the apartment. The co-borrower also has his own responsibilities:
- pay only the amount specified in the mortgage agreement;
- if during the period of purchase of the apartment he was married to the borrower, he can count on receiving a share;
- if they are not officially married, then the co-borrower receives a share equivalent to the amount of his payments;
- if he refuses his share in the apartment, he will have to make payments on the loan.
The co-borrower has the right to a share, but will not be able to fully own the apartment. An exception is if the borrower waives his obligations and the entire debt is paid by his trustee. Then the housing becomes completely his property.
How is a mortgaged apartment divided during a divorce?
There are two ways to divide property during a divorce: by agreement of the parties or through the court. And it doesn’t matter - during marriage, during divorce or after.
In both cases, it is advisable to first discuss with the bank the option of dividing the apartment and responsibility for the loan, if it was not determined when applying for the loan, for example, in the terms of the marriage contract.
Options could be:
- one spouse remains the owner of the apartment and the title borrower, and the other is removed from the transaction (provided that the income of one borrower allows him to pay the debt alone);
- pay off the mortgage through joint efforts, and then sell the apartment without encumbrance and divide the money;
- sell the mortgaged apartment, close the debt, divide the remaining money between the owners.
Misha and Marina chose the simplest and “boring” option of divorce and division of property and debts: they agreed on everything peacefully and entered into an agreement with a notary. To resolve the mortgage issue on a shared apartment, they decided to sell it, pay off the debt, and divide the rest of the amount. Now all they have to do is officially divorce and submit papers to the bank for approval of their version of division.
If the parties agree on how to divide the property on their own , you can get a divorce at the registry office, and have the agreement on division certified by a notary.
The agreement can stipulate who will make payments under the loan agreement or the insurance agreement for borrowers and the housing itself, who will receive the housing after the encumbrance is lifted, whether compensation is due to the co-borrower who withdraws from the transaction, and its amount.
If there are minor children in the family or the parties could not agree on the division of the apartment and the loan, they must go to court.
In court, property between the parties will be divided in equal shares, unless another option is provided. If one of the parties is awarded property that exceeds its allotted share in value, then the “deprived” party will be entitled to compensation.
If you are not satisfied with this solution, you can demand a share in kind. This means that the owners will receive part of the common property as individual property not only on paper, but also physically. In practice, this is possible with a private house: divide the premises between the owners, make different entrances and separate bathrooms.
If we are talking about an apartment building, then this is not only impractical, but most often it is physically impossible (for example, in a one-room apartment). Therefore, most likely, the “deprived” party will have to be content with compensation for the lost property.
Not only things, apartments, cars, but also debts can be common if they arose in the common interests of the family (as in the case of a mortgage - to improve living conditions). In a division, each person receives a portion of the debt proportional to their share of the property.
For example, the balance of the mortgage debt is 900 thousand rubles. The apartment is divided in half. This means that the co-borrowers must pay the bank 450 thousand rubles each. However, if one of the owners stops paying, the obligation to pay the debt in full will pass to the other owner.
What needs to be done to divide the mortgaged apartment:
- We conclude a separation agreement with a notary or in court and officially register the divorce. You can do this in any order.
- We contact our bank with all the documents that we received as a result of actions under paragraph 1. This is a divorce certificate, an agreement on the division of property or a court decision, as well as documents at the request of the bank. For example, if there is a decision to leave an apartment to one of the co-borrowers, documents will be needed to assess his solvency. In any case, it is better to check with the lender for a complete list of documents.
When can the bank take away the apartment?
If the borrower does not fulfill his obligations under the mortgage agreement, the bank may terminate it unilaterally. In practice, housing purchased on credit is taken away for regular delays and debts. The bank can put the borrower's property up for auction without asking his consent. But, having repaid the debt, you can come to an agreement with the bank and continue to repay the loan.
The contract states under what conditions the buyer may lose the apartment. This usually means several missed payments. Any failure to comply with the terms of the agreement may become a reason for its unilateral termination and early repayment. Lawyers advise if any difficulties arise, contact the bank for advice.
Important! An apartment with a mortgage may be foreclosed upon, even if it is the only home. But the bank that issued the mortgage can do this.
Is it possible to change the terms of an old contract?
This is possible if for a number of reasons the borrower cannot pay the specified amount. The Bank considers each situation individually. He may offer to reduce the amount by increasing the repayment period.
There is a procedure for debt refinancing - the borrower takes out a new loan to repay the previous one on suitable terms. In order for the bank to agree to change the terms of the mortgage agreement, the borrower must provide documents confirming the change in his financial situation.
A person becomes the owner of an apartment not after repaying the mortgage, but when the purchase and sale agreement is signed. But it is secured, so the bank can take it away if the terms of the agreement are not met. If the borrower has difficulty repaying the loan, he must notify the lenders. The bank may make concessions and change the terms of the agreement.
Family issues and property purchased before marriage
A person alone owns only the real estate that he bought with a mortgage before marriage, after which he paid it off himself. Even a divorce in this case does not give the former half the right to claim a division, a share in the house or part of the money from the sold apartment.
The owner of the apartment with a mortgage is only the person who took it out before the marriage, and he will remain the owner after the divorce.
The situation changes radically if, during the marriage, the second spouse also contributed part of the money from the income he received to pay off loan obligations.
Now the first spouse is obliged to pay the second a part of the money equal to what he spent on monthly payments (provided that the fact of making these payments can be proven with the appropriate checks and receipts) or he is obliged to allocate him a share in the apartment in proportion to the amount he contributed.
It is impossible to simply take the apartment, not return the money to the ex-spouse, or not allocate a share. Such issues will be resolved in court and the court is always on the side of the victim in respect of whom the law was violated.
The mortgage taken out after the official marriage now belongs to both spouses, and often the second of them is obliged to act as a co-borrower. Even if the second spouse had no income, only took care of the household or the child, and the entire burden of payments fell only on the shoulders of the second, this still has to be proven.
Judicial practice shows that during a divorce it is necessary to collect as many documents as possible, this is the only way to avoid giving part of the share in the purchased apartment to an unemployed person (or, for example, a drunken person).
If, in addition, during the marriage the couple had a child who is a minor at the time of the divorce, then the court will allocate a larger share in the mortgaged apartment to the parent with whom the child will remain.
All in order not to violate the rights of the little citizen.
