In case of divorce orheritageon redemption of a property share (or "balance") allows a spouse or heir to obtain the full ownership from well.

How does it work? What are the steps, what are the costs? We explain it all here!

Buying back a property share with the "Soulte Buyback

Equalization payments, definition

• The balance est un terme juridique qui désigne les shares in a property owned by the rightful claimants This can be the case for ex-spouses following a divorce, or for heirs in the context of an inheritance.
• The Buy-back of debt is to pay compensation to recover the shares held by another beneficiary and thus obtain full ownership of a property.
• Regardless of the origin or purpose, the purchase of a balance must be concluded before a notary and must show evidence of a notarial act which is a deed of partition of liquidation for divorce or deed of partition in the context of a succession.

Who should pay the balance?

In all cases, the balance must be paid by the person wishing to obtain the full ownership of the property to the rightful claimants. However, there are some specificities depending on the status:

In the case of a divorce

• Regarding the divorceif one of the former spouses wishes to retain the propertyThe procedure is simple and quick if the ex-spouse has no property rights. The procedure is simple and quick if the ex-couple has not no current property loans. If not, the cohabitant who wishes to separate from the property must uncouple from the current loan. This operation requires approval of the creditor bank.
• For a separation following a PACS, the procedure remains similar to that for divorce.

In the case of a succession

• Regarding the successionIn the case of an inheritance, the person wishing to benefit from the full ownership of the inherited property must buy the all shares held by the various rights holders. It is generally simpler to buy back a balance in the context of an inheritance than in the context of a divorce or separation because the value of the shares of each heir is indicated in the will.
• It is quite possible to take out a mortgage to perform a Buy-back of debt in the context of a succession !

How is the redemption of a property share calculated?

In order to buy back the balance, various calculations and operations must be taken into account. Let's take a look at how to estimate the amount of the balance and what the associated costs are.

Estimating the amount of the balance

Estimating the balance in a divorce

If the property is owned equally by the two former spouses, the calculation is as follows

Estimated value of the property - outstanding capital = net value of the property
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Example: Mr Smith and Mrs Smith are getting divorced. Mr Smith wants to keep their property in Strassen. He will therefore have to buy back the balance from Mrs Smith. The estimated value of the property is €800,000. The couple have not yet finished paying off their loan, which still has €300,000 to go.

800,000 (value of the property) - €300,000 (remaining loan) = €500,000
2

The amount of compensation Mrs Smith's balance is €250,000. Mr Smith will therefore have to pay €250,000 (excluding ancillary costs) to Mrs Smith to buy back her balance and take over the loan in her name alone.

Estimating the balance in an inheritance

For an estate, the percentage and amount of the shares is generally fixed in the will. To put it simply, if the shares are shared equally among the heirs, the calculation is as follows:

Estimated value of the property - outstanding capital = net value of the property
X number of heirs

Example: Following the death of their parent, one of the four Dupont brothers wanted to obtain full ownership of the family home in Capellen. Their parent no longer had a mortgage on the property. The house was divided equally between the four brothers. When the will was drawn up, the property was valued at 1 200 000€.

1 200 000€ (value of the property) - 0 € (remaining loan) = 1 200 000€
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The amount of compensation for each of the four brothers is €300,000. The Dupont brother will therefore have to pay €900,000 to his siblings to buy out their balance.

Costs related to the redemption of the property share (or "balance")

In addition to the amount of the balance, it is also necessary to take into account the costs of buying back the property share. The most common of these are: notary fees, mortgages for the purchase of the balance and bank penalty fees.

Notary fees for the purchase of a balance of payments

The notary's fees are made up of the following elements

• Fees due to the Treasurywhich are the registration fees.
• Disbursements, to cover the costs incurred by the notary to obtain specific services or documents (land registry, mortgage, etc.)
• The notary's feesThese fees, which take into account the remuneration of the notary and his staff, are fixed by Grand-Ducal regulation.

In general, notary fees are equivalent to 7 or 8% of the value of the property.

Mortgage fees

If you have to take out a new mortgage to buy back the balance, you will have to pay mortgage fees.

Bank penalty fees

If you had subscribed to a You may have to change your home loan as a result of your change in status. You may have to pay penalties, such as early repayment penalties.

The total cost of a buy-back of real estate shares

To summarise, a relief buy-back consists of the following elements:

In the case of a divorce, the value of the balance will have to be taken into account, notary fees, mortgage fees as well as the bank charges & penalties and the recovery of the outstanding capital.

Example: Mr Smith will have to pay €250,000 to buy back the balance from Mrs Smith. He will also have to pay all the notary's fees, which are estimated to average between 7 and 8% of the value of the property. In addition, Mr Smith will have to take out a new mortgage. He will have to pay new mortgage fees to the mortgage office. He will also have to cover bank penalty charges.

For a succession, it will be necessary to take into account the value of the balance, notary feesand the mortgage fees.

Example: MMr Dupont will have to pay €900,000 to buy back the balance from his brothers, he will also have to pay the full notary fees (7% of the value of the property). To cover all his expenses, Mr Smith has to take out a mortgage. He will therefore have to pay new mortgage fees to the mortgage office.

How can I finance a buy-back?

Which loan for a debt settlement?

• If you don't have the cash to buy out your spouse's or co-heirs' entire balance, you may need to obtain financing from a bank or a dedicated organisation.
• For example, you can take over the current property loan under existing conditions, keeping the the current monthly payments.
• However, your situation is changing: from two incomes to one income, you will also have new fees

The alternative is to take out a new mortgage.

• The procedures will be the same as for your previous project. For this new loan, you will have to estimate your borrowing and repayment capacities and talk to the banks. You will also have to take into account the various fees related to this transaction.
• Based on our expertise and our status as a leader in real estate credit in Luxembourgour brokers help you to set up your file and to find the best financing solutions. For example, by offering montages allowing you to combine your various home loans in one one and the same loan.

What you need to know about the purchase of a balance

• A buy-back is calculated on the basis of the estimated value of the property from which is subtracted the outstanding capital. This amount is then divided into according to the beneficiaries and shares they hold.
• To the amount of the balance, it will be necessary to add ancillary costs (notaries, mortgages, banks, etc.) which may vary in depending on the property and your situation.
• The financing of a balance buy-back is similar to the conditions and practices of conventional mortgages. Use a broker will simplify the process for you, and give you the best conditions!