Are you planning to spend more money on the purchase than your partner? Then it is advisable to record this distribution properly in order to prevent unpleasant discussions about the intentions afterwards. Suppose you plan to purchase a house together with your partner and you have a savings account of € 100,000 that you wish to contribute, but your partner does not deposit any savings.
In that case, one partner contributes more than the other partner. In most cases you buy the house together for each half of the house. When selling the property, both partners are then entitled to half of the total value of the house minus the mortgage. Despite the fact that one partner paid more at the time of purchase than the other partner.
If, in such a situation, you leave nothing to the notary and separate – for whatever reason – unpleasant situations can arise. The partner with the most contributed own money then loses half of the more contributed money. This situation can be prevented by drawing up a debt confession. This can also be arranged in a cohabitation agreement. In case of a possible sale of the house, you then mutually agree that half of your own contributed own money is paid by your partner.
Let’s take as an example the situation where Ruud and Joke buy a house of € 400,000 and where Joke contributes € 100,000 from an inheritance and the remainder of € 300,000 is borrowed from the bank. Suppose Ruud and Joke divide over 5 years and the house has risen € 100,000 in value Joke gets her € 100,000 back and the profit of € 100,000 is shared by them together, on the basis of fiftyfifty.
At the moment that the value has fallen by € 50,000, Ruud creates a debt of € 25,000. After all, the mortgage at the bank will first be repaid of € 300,000 because it goes before Joke will receive € 50,000 of the remaining revenue and then the loss of € 50,000 will be shared between Ruud and Joke, where Ruud gets a debt to Joke of € 25,000.
Also agreements on the payment of this debt and the amount of any interest compensation on this debt can better be recorded in advance at the notary. In this way you can describe all situations that occur in order to prevent annoying discussions. You can specify in the delivery deed or cohabitation agreement when the debt is due and payable, what consequences there are if the agreements are not met, et cetera.
Alternative To Confession Of Guilt
A confession of debt is a way of arranging the unequal contribution. Nevertheless, it does not always feel right to assign a debt to the partner in this way. There is therefore also a good alternative to the confession of guilt, namely the cohabitation contract . This contract can include how the contribution to the jointly occupied home is dealt with. Both parties can indicate how they would like to have it arranged. We continue on the example of Ruud and Joke.
Ruud and Joke decide that a confession of guilt does not match the way in which they want to arrange the financing for their home. Ruud does not feel comfortable with the idea that Joke has a claim against him that can be claimable at any time under certain conditions. They therefore decide to explore the alternative, the cohabitation agreement.