Who bears the cost of mortgage payments between the date of the ancillary matters order and the date of completion during a divorce? What happens if the spouse ceases to make mortgage payments before the date of completion?

4 July 2023

Foo Soon Yien

What happens to matrimonial assets during a divorce?

​A typical divorce in Singapore has two stages, the dissolution of marriage (Stage 1) and the ancillary matters (Stage 2). During the ancillary matters stage, the courts will decide on matters that are financial in nature, including but not limited to, the division of matrimonial assets and maintenance for the spouse and child. 

The judge will decide how the matrimonial assets are to be divided or who shall receive whichever properties are in question. Ownership of the relevant properties are then transferred from one party to the other as per the court’s orders by a specified date, also known as the date of completion.

​However, during this period, the properties may have outstanding liabilities such as mortgage loans. The question is thus who pays for these liabilities until the date of completion.

General rule of the courts when deciding who should pay the mortgage payments

The courts have stated that the servicing of outstanding mortgage payments will increase the net value of the property and will solely benefit the eventual owner. Thus, the spouse who will be the eventual owner of the property should bear the mortgage payments (the “General Rule”).

Are there exceptions to the General Rule?
 
In the Court of Appeal case of TIC v TID [2019] 1 SLR 180 it was stated that there are circumstances where the court may provide an exception to the General Rule, such as: (the “TIC v TID Principle”)

• When it is unjust to order the eventual owner to bear the mortgage payment;
• When the eventual owner is not financially able to bear the costs of the mortgage; or
• How the matrimonial assets were divided.

An example of such a scenario is if the wife was a home-maker and therefore unable to bear the mortgage payments of the property. Any such circumstances must be raised to the court, otherwise, the court will simply apply the General Rule. 

What happens if the spouse stops making mortgage payments prior to the date of completion?
 
In UUV v UUU [2020] SGHCF 7, the husband ceased to make mortgage payments after the date of the ancillary matters order but before the date of completion. In line with the TIC v TID Principle and the General Rule, the court ruled that the wife as the eventual owner of the property should bear the cost of the remaining mortgage payments. She was also to pay any late payment charges or cancellation fees relating to the existing mortgage. 
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Conclusion
 
Issues relating to personal finances can become extremely complicated due to a divorce. If you are currently undergoing a divorce and seeking the best possible result for yourself, it is crucial to understand your entitlements and the relevant laws in Singapore.