Real Estate

Dream home without marriage certificate: How to protect yourself

A young couple is sitting in an apartment in the living room and discussing the construction plans of the future house
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Anyone who lives in a “wild marriage” and wants to purchase a property together does not enjoy the same rights as married people. What happens in the event of divorce or death, for example, is not regulated by law in this case. Of course, unmarried couples can also fulfill their dream of having a house together. However, you should then pay attention to a few things.

# 1 funding

Financing a property together and without a marriage certificate is generally not a problem. For credit institutions, it doesn’t matter whether a couple is married – what matters most to them is the creditworthiness of the borrower. This is often better for two working people together than for singles. This leads to better interest rates. Financing for two is therefore just as worthwhile for unmarried people as it is for married people. However, couples should make sure not only to bear the loan costs together, but also to actually complete the financing together. Only those who sign the loan agreement are liable for the loan. If both parties sign, neither can pull themselves out of the affair in the event of a separation.

# 2 Land register entry and ownership structure

In order for a property to belong to both partners, both must be in the land register. Many can be registered with an ownership ratio of 50 percent. If they split up, both of them automatically own half of the house, regardless of who invested more. However, it often happens that with couples, one of the two earns more and therefore takes on a larger part of the repayment or contributes more equity. Therefore, unmarried couples should record the ownership structure in the land register in somewhat more detail. “Everyone should be at least as involved as they contribute to the property,” advises notary Michael Uerlings from Notare Uerlings & Bremkamp.

There are several ways to ensure a fair distribution of property. The first is a community of fractions: The couple determines who has what fraction of the property and records this in the land register. “Couples should take into account that the participation rate can change over time,” warns Uerlings. This is often the case, for example, when one of the partners takes parental leave or is promoted and receives a raise.

At the beginning of the financing, it is difficult to assess how much whose share in the house will ultimately be. Therefore, Uerlings advises another variant: the establishment of a civil society (GbR). “Unlike the fractional community, the GbR has the advantage that the ownership quota can be changed flexibly at any time,” he explains. Couples enter the GbR as the owner in the land register, plus the names of the two shareholders, i.e. their own names. The ownership quota of the house then follows from the amount of the GbR share. How high the share of a partner in the GbR is can be changed almost daily, as a result, the ownership structure of the property. However, owners should keep in mind that every time the quota changes, the tax office is on board and demands information about why the ownership structure has changed. Depending on how the tax office evaluates the change, gift tax or real estate transfer tax may apply.

In the GbR contract, owners can also record further details, for example that in the event of a separation everyone only gets his own share back. Or who has which renovation obligations. Homeowners should also clarify the question of which partner can continue to live in the property after a separation and for how long. “This is an important question, especially when children are involved,” says Uerlings. Anyone who agrees a corresponding notice period in the GbR contract protects themselves from ending up on the street in the event of separation.

Even without a GbR contract, real estate buyers can regulate these and other details, namely in a partnership contract. There is no blueprint for that. Couples have to negotiate the content individually with each other, but can consult a notary or a lawyer. With a GbR contract, Uerlings advises professional help anyway. “There are so many individual details to take into account here that it is hardly feasible for laypeople,” he says. How high the consulting costs are depends on the value of the property and is recorded in a table of fees. With a property value of 250,000 euros, a couple pays around 1,000 euros for a GbR contract with a notary.

# 3 Inheritance law and inheritance tax

Estate issues can also be clarified in a GbR contract. In this way, unmarried couples can ensure that one inherits part of the shared property after the death of the other. Otherwise, the surviving dependents are not entitled to inheritance and receive nothing from their partner’s real estate share. So that the partner does not go empty-handed in the event of death, unmarried inheritance issues can also be clarified by will.

Regardless of whether you regulate your estate by means of a GbR contract or a will: unmarried couples always pay substantial inheritance tax. Spouses are entitled to an allowance of 500,000 euros – for partners it is just 20,000 euros. With a real estate legacy, the tax exemption is quickly exhausted. On everything that goes beyond that, 30 to 50 percent inheritance tax is due, depending on the amount of the total inheritance. Uerling’s first tip to unmarried clients is therefore: “Better to marry and draw up a corresponding marriage contract.”


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