Civil and Commercial Perspective | Remedies for One Party Being Pursued for Repayment After Failing to Fulfill the Divorce Agreement Regarding Property Ownership and Mortgage Payment
Published:
2025-08-25
In a divorce agreement where the property is assigned to one party and the mortgage is borne by that party, this agreement is only effective between the spouses and cannot be enforced against banks or other creditors. Both parties remain jointly liable for joint debts, but after one party actually repays, they may seek reimbursement from the other party according to the agreement.
If a divorce agreement between spouses stipulates that the property belongs to one party and the mortgage loan is borne by that party, this agreement is only effective internally between the spouses and cannot be enforced against banks or other creditors. Both parties still bear joint and several liability for joint debts, but the party who actually repays can seek reimbursement from the other party according to the agreement.
1. Effectiveness of Divorce Agreement on Property Ownership and Mortgage Repayment
(1) Internal Effectiveness of the Agreement
1. Legal Basis
According to Article 69 of the "Interpretation (I) of the Supreme People's Court on the Application of the Marriage and Family Part of the Civil Code of the People's Republic of China," the clauses in a divorce agreement regarding the handling of property and debts are legally binding on both parties.
2. The case (2022) Liao 0123 Minchu 977 holds that such agreements belong to the internal distribution of debts between spouses, and if one party advances the mortgage loan after divorce, they may request reimbursement from the other party based on the agreement.
The court holds that according to Article 69, Paragraph 2 of the "Interpretation (I) of the Supreme People's Court on the Application of the Marriage and Family Part of the Civil Code," "the clauses in a divorce agreement signed pursuant to Article 1076 of the Civil Code regarding the handling of property and debts are legally binding on both parties." In this case, internally, the plaintiff and defendant signed a divorce agreement at the civil affairs department at the time of divorce, stipulating that the involved property belongs to the defendant. After divorce, the defendant Li repays the mortgage monthly and acknowledges bearing the debt himself. The agreement is legally binding on both parties. Externally, the lending bank requires both parties to fulfill the mortgage repayment obligations according to the loan contract. Both parties should perform repayment obligations as per the contract. After the plaintiff repays the mortgage according to the contract, based on the internal agreement of the divorce agreement, the plaintiff has the right to request the defendant to reimburse the mortgage payments made to the bank. Therefore, the court supports the plaintiff's claim for the defendant to repay the mortgage.
3. The case (2020) Liao 1103 Minchu 2032
This court holds that according to legal provisions, the clauses in a divorce agreement regarding property division or agreements reached by the parties on property division due to divorce are legally binding on both parties. In this case, the plaintiff and defendant voluntarily signed a divorce agreement at the time of divorce, clearly stipulating property ownership including the house and the mortgage debt as joint debt. The above agreement reflects the true intention of both parties and is lawful and valid, thus binding on both parties who should comply. The plaintiff requests the defendant to repay the mortgage of 68,123.83 yuan paid on behalf of the plaintiff from September 5, 2018, to May 21, 2020. The house was purchased during the marriage, and the purchase loan is joint marital debt, so the mortgage before divorce should be repaid jointly. After divorce, according to the divorce agreement, the property in Xinglongtai District belongs to the male party, and the remaining loan on the second house is to be repaid by the male party. The defendant should repay the bank mortgage as agreed. Therefore, the court partially supports the plaintiff's claim.
(2) The External Effectiveness of the Agreement Cannot Be Enforced Against Creditors
1. Legal Basis
Article 551 of the Civil Code clearly stipulates that debt transfer requires creditor consent, and changes in repayment responsibility without bank consent do not exempt joint liability. Therefore, the mortgage transfer clause in the divorce agreement is invalid against the bank, and the bank may claim the debt from either party.
2. Rules for Identifying Joint Debts
(1) Legal Basis for Identification
Article 1064 of the Civil Code stipulates that mortgage loans taken during the marriage are joint debts of the spouses.
(2) Some courts in judicial practice hold that even if the divorce agreement stipulates property ownership, joint debts are still jointly and severally borne by both parties, and creditors may seek repayment from either party.
The court in case (2024) Lu 1321 Minchu 6429 holds that a legally established contract is binding on the parties. Company X advanced 79,315.62 yuan of the mortgage loan on behalf of Xu and Wang to the Luozhuang branch of Bank of China. The facts are clear and evidence sufficient, which this court confirms. Company X's claim for the advanced amount of 79,315.62 yuan against Xu and Wang is justified and legally supported, and this court supports it. Company X claims interest on the advanced amount calculated at four times the Loan Prime Rate published by the National Interbank Funding Center from the date of each advance to the actual payment date, which complies with the parties' agreement and does not violate legal provisions, and this court supports it. Loan Prime Rate calculated at four times the Loan Prime Rate published by the National Interbank Funding Center from the date of each advance to the actual payment date, which complies with the parties' agreement and does not violate legal provisions, and this court supports it.
2. Path to Exercising the Right of Reimbursement — The Actual Repayer Can Seek Reimbursement Based on the Divorce Agreement
(1) The judgment in case (2024) Su 0685 Minchu 3157 confirms that after one party repays the mortgage on behalf of the other, they may sue to require the other party to pay the advanced amount.
This court holds that citizens' legitimate rights and interests should be protected by law. The divorce agreement stipulates that the mortgage loan is to be repaid by defendant Chen 2, which is an agreement on the outstanding debt. Therefore, the mortgage loan from May 2017 should be repaid by defendant Chen 2. The plaintiff Liu 1 repaid a total of 75,301.42 yuan during this period (provident fund loan 40,394.89 yuan + commercial loan 34,906.53 yuan). After deducting the 37,313 yuan already paid by defendant Chen 2, defendant Chen 2 still needs to pay plaintiff Liu 13,798.42 yuan.
(2) The judgment in case (2017) Yu 01 Minzhong 7706 confirms support for claims for reimbursement after one-time full repayment.
This court holds that appellant Zhang and appellee Liao clearly agreed in the divorce agreement that Zhang is responsible for repaying all loans on the involved property. The agreement does not specify the repayment method, so repayment can be monthly installments or a one-time full repayment. Liao's choice to repay in a lump sum and then request Zhang to pay the loan amount complies with the divorce agreement and legal provisions.
3. Obstacles to the Path of Realization
(1) Risks of Not Timely Handling Property Transfer
If the property ownership is not changed promptly after divorce, the house may still be seized due to debts of the original spouse, requiring a lawsuit to object to enforcement to confirm ownership.
(2) Avoiding Risks by Forcibly Transferring Ownership through Judicial Procedures
If the other party refuses to cooperate with the transfer, one may sue to enforce the divorce agreement and seek compulsory execution. Property Rights Registration is the key basis to exclude third-party enforcement.
4. Legal Advice and Risk Prevention
(1) Improve Agreement Clauses
Clearly define breach of contract liabilities in the divorce agreement, such as in case (2024) Hu 0116 Minchu 3457 stipulating "if mortgage payment is overdue for ten days, the share proportion will be reduced," to strengthen performance guarantees.
This court holds that contracts legally established are protected by law. Parties shall fully perform their obligations as agreed. If one party fails to perform contractual obligations or performs them inconsistently with the agreement, they shall bear breach of contract liabilities such as continuing performance, taking remedial measures, or compensating losses. If one party fails to pay the price or remuneration, the other party may demand payment. In this case, the divorce agreement reached by the plaintiff and defendant complies with legal provisions and should be protected. The defendant's failure to perform obligations as agreed in the divorce agreement shall bear corresponding legal responsibilities.
(2) Coordinate Creditor Procedures
Negotiate with the bank to change the repayment subject: according to Article 551 of the Civil Code, it is possible to try to sign a supplementary agreement with the creditor to complete the debt transfer, avoiding subsequent recovery disputes.
Legal Provisions:
1. "Civil Code of the People's Republic of China" Article 700 stipulates: "After the guarantor assumes the guarantee responsibility, unless otherwise agreed by the parties, the guarantor has the right to recover from the debtor within the scope of the guarantee responsibility; enjoys the creditor's rights against the debtor, but shall not harm the creditor's interests."
2. Supreme People's Court Interpretation on the Application of the Marriage and Family Part of the "Civil Code of the People's Republic of China" (I)
Article 35, Paragraph 1: "If the parties' divorce agreement or the effective judgment, ruling, or mediation by the people's court has dealt with the division of marital property, creditors still have the right to claim rights from both spouses for joint debts."
Article 69: If the parties reach an agreement on property and debt settlement conditioned on divorce by agreement or court mediation, and the divorce does not occur, or one party reneges during the divorce litigation, the people's court shall determine that the property and debt settlement agreement is invalid and adjudicate according to Articles 1087 and 1089 of the Civil Code based on actual circumstances. The clauses on property and debt settlement in the divorce agreement signed according to Article 1076 of the Civil Code are legally binding on both parties. If disputes arise from the performance of the above agreement after registration of divorce, the people's court shall accept the lawsuit.
Article 78: If one spouse signs a real estate sales contract before marriage, pays the down payment with personal property, and takes a bank loan, and the mortgage is repaid with marital property after marriage, and the real estate is registered under the name of the party who paid the down payment, the real estate shall be handled by both parties' agreement upon divorce. If no agreement is reached according to the preceding paragraph, the people's court may rule that the real estate belongs to the registered party, and the unpaid loan is the personal debt of the registered party. The payments made jointly after marriage and the corresponding property appreciation shall be compensated by the registered party to the other party upon divorce according to the principle stipulated in Article 1087, Paragraph 1 of the Civil Code.
3. "Supreme People's Court Interpretation on the Application of the Guarantee System Related to the Civil Code of the People's Republic of China" Article 18 stipulates: "If a guarantor who has assumed guarantee or compensation responsibility recovers from the debtor within the scope of responsibility, the people's court shall support it. If the same creditor has both collateral provided by the debtor and guarantee provided by a third party, and the third party who has assumed guarantee or compensation responsibility claims to exercise the creditor's secured rights against the debtor, the people's court shall support it."
(Statement: This article is the author's summary based on experience, for communication and discussion only)
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