Residential Property Pension Fund Assets

What Happens if a Couple Divorces and Residential Property Was Financed with Pension Fund Assets?

Many couples use money from their pension fund to finance their house or apartment. This form of financing can certainly make sense in some cases. If they divorce, however, things can get complicated, particularly if the person who wants to assume ownership of the house did not make an advance withdrawal from his/her pension fund. 

If a married couple takes money from a pension fund to purchase residential property, this money is tied up for the entire marriage and is noted in the land records as pension fund assets with what is known as a "restriction of the right of disposal".

Selling the Property

If the couple sells the house as part of a divorce, the pension fund must approve the sale. The proceeds from the sale are used to pay the amount withdrawn in advance back into the pension fund of the person who made the advance withdrawal. The pension fund assets accumulated during the marriage are then calculated for both spouses. Naturally, this calculation yields two different amounts. Half of this difference must be transferred from the spouse with the largest calculated assets to the other spouse's pension fund as an equalization payment.

Assuming Ownership of the Property

The matter is not all that easy if one spouse assumes sole ownership of the property after the divorce: If the advance withdrawal was made by the person who is now assuming ownership of the property, this person can take possession of the advance withdrawal. In such cases, the other person is entitled to an equalization payment.

If the person assuming ownership of the property did not make an advance withdrawal, there is no universal solution. The options available depend on various factors and need to be reviewed separately for each situation. As such, a specialist should definitely be consulted.