How are a mortgage and purchase of an apartment treated, from the point of view of common marital property? What is the procedure in the event of a divorce?
If a property is purchased during a marriage, it becomes a part of the spouses’ common property (“CP”) if the couple is married pursuant to the laws of the Czech Republic. That means that it belongs to both spouses indivisibly, and both spouses are liable (solidary liability) for any obligations arising in connection with a mortgage used to pay the purchase price or a part thereof. Nevertheless, CP may be narrowed by a notarial record and a property may be extracted from CP. If a property is extracted from CP and a mortgage has been provided for its purchase which has also been extracted from CP, only the spouse who owns the property will be liable for its repayment.
Another way that one spouse alone can acquire a property is by acquiring it with funds obtained prior to the marriage or received as a gift or inheritance during the marriage. Such funds do not become part of CP.
In the case of a divorce, the following options are available for a property owned as part of CPi:
- If the spouses settle before the divorce or within 3 years after the divorce, the property will become the ownership of one of the former spouses, with the other obtaining adequate financial compensation from the first spouse;
- If the spouses do not settle within 3 years of their divorce, ownership of the property transforms from CP into co-ownership by share of the two former spouses;
If the property is encumbered with a mortgage, both divorcing spouses bear solidary liability for it, i.e., jointly and severally. Mortgage settlement options:
- One of the spouses takes over the mortgage;
- The property is sold (either while CP still exists or subsequently, when the property is owned by the spouses in joint ownership) and the proceeds are used to repay the mortgage, with the remainder being split between the ex-spouses.
