Recourse: what is it and why can it cost you (a lot of) money?

Suppose you and your partner buy a house together. You pay the full purchase price, but you are both 50% owner on paper. No problem, right? But then a year later you decide to get married without a prenuptial agreement. And after a few years, things go awry and a divorce ensues. Then what happens to your investment?

This is exactly what a recent Supreme Court ruling is about. And believe us: the outcome was pretty sour for the payer (in this case, the husband).

Back to basics: what is recourse?
Recourse means that you can later reclaim the money you paid for someone else. This often happens with joint purchases or debts. Think of a house that you finance alone, but your partner also becomes a co-owner. In this case, the husband had a recourse claim against his partner of €192,000, or half of the purchase price he had paid, when he bought the house. So far, no discussion.

Marrying without a prenuptial agreement: a gamechanger
The couple married without a prenuptial agreement in 2018. And this is where the Limited Community of Property Act comes in. This is because it stipulates that premarital debts remain with the original owner unless they relate to a common asset. And the latter is exactly the problem here. Because the house was jointly owned, the debt fell into the community. Consequence? The husband lost half of his recourse claim and could only reclaim €96,000 instead of €192,000.

What can you learn from this?
✔ Make arrangements before you buy a house together
Consider a cohabitation agreement or a promissory note setting out how the money will be divided in the event of a breakup.

✔ Consider a prenuptial agreement.
Especially if you bring in a lot of your own money, it's smart to document it properly. This can save a lot of frustration (and money) if things go wrong.

✔ Know what the law says
The rules surrounding community of property and recourse law are not always logical or fair. By looking into this (or bringing in an expert), you can avoid unpleasant surprises.

In short, marriage is a beautiful thing, but also a legal contract with major financial implications.