Handling mortgaged property in divorce involves three options: (1) Sell and split - simple if sale price exceeds debt (property division under Civil Code Art. 768); if underwater, consider voluntary sale with lender consent. (2) One spouse stays - easier if the loan holder stays; if non-holder stays, loan refinancing or name change needed (requires bank approval). (3) Pair loans (both spouses as borrowers) - most complex, often requiring full sale. Joint guarantor status does not automatically terminate upon divorce. Property value for division: market value minus remaining loan balance. Custody arrangements may support housing rights for the custodial parent.
Housing Loans in Divorce in Japan: Options for Properties with Outstanding Mortgages
Key Takeaways
- ✓Changing mortgage names requires bank approval and is not straightforward
- ✓Negative equity may leave remaining debt even after selling the property
- ✓Joint mortgages require both parties' consent, complicating divorce proceedings
- ✓Removing joint guarantee status often requires refinancing or lump-sum repayment
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