In the State of Israel, couples who wish to purchase an apartment are often forced to take Loan, called Mortgage, for the purpose of financing the purchase of a residential property.
In most cases, this is the largest and most complex financial commitment that couples will have to deal with for years. Given the fact that the vast majority of couples do not have enough equity to purchase an apartment without a loan, the demand for mortgages has also increased significantly.
Bank of Israel data shows that the price of an average apartment today is about 1.4 million shekels. This is double the price of the same average apartment in 2004, and in that same year, the average mortgage was 350,000-400,000 shekels, but today the average is about 800,000 shekels.
Taking out a joint mortgage is a long-term undertaking, as covering the mortgage loan could take between twenty, twenty-five, and even thirty-five years. Throughout this period, it will require a joint effort on the part of the couple to meet the monthly repayments of the loan.
As collateral to cover the mortgage, mortgage banks require that the couple pledge the purchased apartment in favor of the bank, so that if all monthly repayments are not paid on time, they can seize possession of the apartment and sell it at the highest price, and the money will be used to cover the mortgage debt.
It is important to emphasize that, as part of the terms of the lien on the apartment, the couple undertake not to sell or transfer their rights in the apartment, not even to each other, without receiving the express permission of the financing bank.
The fate of your mortgage in the event of a divorce…
According to the Central Bureau of Statistics, every third couple in Israel divorces. Some of the separated couples Divorce Agreement Or a separation agreement, which also regulates the issue of the apartment and the mortgage. Such an agreement must receive the approval of Home Family Law or the approval of the Rabbinical Court.
The remaining couples are forced to conduct proceedings in the family courts until the disputes are resolved and the divorce issue is finalized through a ruling.
It is important to emphasize that the courts have expressed their unequivocal position, according to which even when one party leaves the apartment and the other remains there alone, the leaving party is not exempt from mortgage payments and the couple must settle this unequivocally, either through an agreement. Divorce And if by means of a judgment.
Until a legal decision or agreement is reached, the husband must participate in the payments or at least part of the monthly mortgage repayments according to what is determined in the procedure. Nazareth Housing Development Authority 22859-06-12 A.K. N. R.A.K..
Another way to resolve the mortgage debt is to sell the apartment to a third party, use the proceeds to cover the mortgage debt, and divide the surplus between the parties. In such a situation, there are no monthly repayments, so there is no problem in dividing the burden.
In the event that the couple is in conflict and has not been able to reach an orderly divorce agreement, the solution to selling the apartment is for one of the parties to file a lawsuit to dissolve the partnership in the apartment, in accordance with Section 37 of the Real Estate Law 5729-1969, which grants each party the right to request Dissolution Sharing in real estate whenever.
In such a case, the court will order the apartment to be sold at the highest price, to cover the mortgage, and to divide the remaining money between the spouses, according to their rights in the apartment.
If, for example, an apartment is registered in the Land Registry Office, in the names of both parties in equal shares, each party will receive 50% of the surplus.
It is important to note that in the context of dissolving the partnership between spouses, and especially in cases involving minors, the legislature has granted the Family Court the broadest authority to act in the most just manner, under the circumstances and at its discretion.
The court can act in a variety of ways, including delaying the sale of the apartment until suitable alternative housing is found for the minors, or requiring the leaving party to continue paying all or part of the mortgage, so that his children will have a place to live, according to the following sections:
- Section 8A of the Family Court Law 5755-1995
- Section 40A of the Real Estate Law
- Section 6 of the Financial Relations between Spouses Law, 5733-1973
The Family Court will give great weight to family considerations, such as the desire to provide stability to children who are already suffering from their parents’ divorce, over their parents’ property rights in the apartment and over the right of ownership or maximizing the value and price of the apartment. See the procedure for this matter. Nazareth Housing Development Plan 9286-08-09 A.S. N. D.S..
Another way to resolve the apartment issue in a divorce is for the parties to agree, or for the court to order, that one party transfer their share of the apartment to the other party, by way of a transfer incidentally. Divorce, sometimes offsetting the purchase price from the receiving party’s share, from the remaining joint property and funds.
majority Lawyers specializing in family matters We recommend transferring the property through divorce, as it is exempt from taxes, including capital gains tax. And the improvement levy Therefore, if this is possible, it is often a more profitable transaction than selling to an external third party in a transaction that is not exempt from tax.
The spouse who receives ownership in this manner usually undertakes to bear the full mortgage payments themselves. This means that the mortgage must be transferred to the receiving party’s name only and the name of the granting spouse must be removed from the mortgage and from the land registry records.
It is important to note that before implementing the transfer of the apartment in the event of a divorce and burdening all mortgage payments on the receiving party, it is advisable to check in advance that the bank agrees to such an arrangement, as without the bank’s approval it will not be possible to transfer the mortgage and register the apartment in the name of the receiving party.
The bank may impose difficulties on the remaining spouse and require the entry of a guarantor, as a replacement for the departing spouse.
The divorce agreement and the judgment are binding on the spouses but not on the bank, which is a separate legal entity and is not a party to the divorce proceedings.
Therefore, from the perspective of the bank and the law, until the name of the lending party is deleted from the loan documents and the taboo, he is still obligated to both the mortgage and the apartment and will bear full responsibility and accordingly, any debt that may arise due to the apartment and the loan.
In light of the above, whether it is a divorce agreement or a judgment, the granting party must be careful and verify in a meticulous and rigorous manner that the receiving spouse has indeed transferred the apartment to his name and has indeed deleted his name from the mortgage documents.
Otherwise, the giving party may be unpleasantly surprised when it discovers that it is in debt because the receiving party has not paid the monthly repayments to the financing bank – and there have been quite a few cases in the past.
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Another common situation is that the couple has children together and until the separation, they all lived in the shared apartment, which is mortgaged.
General law imposes on parents the obligation to ensure that their children’s needs are met, Section 14 of the Legal Training and Guardianship Law 5722-1962. One of the essential needs that parents must provide for their children is shelter. This obligation is called in legal language a shelter.
Regarding the expenses of the section, a guiding ruling of the Supreme Court clearly states that according to Jewish personal law, the father’s participation in the expenses of the section and its maintenance will amount to one third of the expenses, for one minor, 40% of the expenses for two minors and 50% for 3 children or more, according to the procedure. A”A 58/87 Harel v. Harel Pedagogical Code 4, 201, 205 and according to procedure A”A 764/87 Ohr v Ohr.
If the parties settle the matter by agreement Divorce – Which is good. However, if the couple goes to court, the ruling will be in accordance with the circumstances of the case, In the name of heart for the benefit of the children And in accordance with the legal principle guiding the specific judge who will rule in the case and according to the circumstances of each case.
As long as it is a rent, there is no particular problem in making the calculation, however, the problem arises when it is an apartment that is the joint property of the couple and when a joint mortgage is imposed on the apartment.
Family court judges have discussed this issue extensively and have divided into two main schools of thought. One views the mortgage obligation as a payment obligation. Foods And a portion of the inheritance, the greater part of which is imposed according to Jewish personal law, on the father. For example, in the procedure A.A. 803/85 Brazilian v. Brazilian.
On the other hand, the second school of thought sees the obligation to pay alimony as a capital obligation in the realm of property law, which is divided equally between the spouses, and an example of this can be found in the procedure A.A. 864/97 Shuker v. Shuker.
Today, the accepted approach in case law is to view the basic amount of the section as a maintenance obligation, while the remainder is considered a capital obligation divided between the spouses – see an example of this judicial approach in the proceeding TAMSH 22859-06-12 A.K. N R.A.K.
There are situations in which it is better to keep the father as one of the borrowers on the mortgage to prevent a situation that could stem from revenge or be used as a means of exerting financial pressure on the woman.
For example, there were cases in which the father stopped transferring his share of the section, because then the bank could foreclose on the apartment, evict the woman and her children, and sell it to a third party to cover the mortgage debt..
There were cases in which fathers tried to get revenge on their ex-wives by not making their share of the monthly repayments, but in the end, such an aggressive and inappropriate approach did not pay off, as when their family was evicted from the apartment by the bank, those fathers were forced to bear part of the burden of expensive alternative housing.
In addition, the same fathers will also bear additional expenses for the purposes of enforcement proceedings and the realization of the apartment by way of its sale, which will be claimed or subsequently deducted by the financing bank.
We would also like to note that the Supreme Court ruled that if one of the spouses avoids paying the mortgage and the other is forced to pay the first’s share, the paying spouse can claim the return of the money he paid, even for his spouse’s share, in accordance with Section 4 of the Wealth Creation Law, 1979.
In light of the above, it is advisable and recommended that both parties, so as not to be burdened with their legal obligations, bear their share of the monthly mortgage repayments and reach an arrangement on the best side.
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