Tips for Buying Real Estate in Belgium
So you’re an American looking to buy property in Belgium. Maybe it’s your home, maybe it’s a rental investment. Great! You’ll be able to live outside the USA and experience another culture while providing housing for locals. One of the first things you should understand is that Belgian real estate laws are different than those in the States (and most other countries). There are some similarities, but there are also some very important differences.
I currently own both residential and commercial properties in Belgium and have studied these differences over a period of years, so here’s my best effort at explaining how they work:
There is no “equity”
What we consider “equity or “equitable interest”, i.e. a percentage of ownership in a property is not a legal concept in Belgium. It does not exist. So if you put 25% down on a house that’s 250,000€, your equity is whatever the purchase price was (250,000€) minus what you paid for it (0€), or 250,000€.
An equitable interest can be created by “encheresed” contract law however. This is where the buyer and seller agree to an equitable interest at closing but they don’t actually put anything in writing so there’s no contract signed with the financier to enforce this agreement later on should something go wrong. The problem with this approach is that under Belgian civil code an encheresed interest is not legally enforceable unless it’s recorded. So your equitable interest in a property is only as good as the paper it’s written on, and there are no guarantees that you can convince anyone to record this agreement with the civil court registrar if things don’t work out down the road.
Additional problems with encheresed contracts: they can be unenforceable for other reasons, such as failure to publish them which invalidates an encheresed contract under Belgian law (you must publish at least 2 months before closing). They can also be waived by one party without also waiving them for the other party which means that person could claim later on that they were never bound by said contract. Bear in mind too that for an equitable interest to be created it must be agreed upon by all parties to the contract, not just your spouse or co-owner.
The bottom line is that if you think you’re buying property “with equity”, think again. Treatment of encheresed contracts (and resulting equitable interests) varies widely among banks and attorneys here in Belgium; some will accept them as binding, others won’t. And no matter how much research you do on this issue before you buy anything, things can change down the road so there’s always a chance that something could go wrong after closing even if everyone claims it should work out fine according to the purchase agreement. So what I’m saying is don’t count on being able to enforce your equitable interest in a Belgian property.
There is no “equity sharing”
Several countries, such as the US and Canada allow spouses to transfer equity between themselves tax-free (in other words, without paying capital gains tax). Not so in Belgium! Spouses cannot create or benefit from equitable interests on each others’ properties. They can each buy their own home(s); they just can’t combine these purchases into one equitable interest that would be recognized under Belgian law. The reason for this rule boils down to government policy: it’s supposed to prevent people from using marriage as a way of buying property together at reduced cost simply because of the combined income of both spouses. But married couples who live here know that there are many other ways of getting around this rule, many of which are not illegal per se. If you want to go through all the legal mumbo-jumbo on how equitable interests are created here, read the post ” The trouble with Belgian mortgages “.
Equity sharing for unmarried couples
The law states that property acquired during a relationship between two people living together can have an equitable interest shared by both parties whether or not they’re married, as long as it’s registered in the other person’s name . Effectively this means that unmarried partners can combine their home buying power under Belgian law. But there are problems if your partner dies or ends up leaving you because even though they have 100% equitable interest in your home(s), only 50% of said interest is inheritable under Belgian civil code . So your spouse or live-in partner could leave you with nothing but a big hassle if they move out and wish to keep the entire equitable interest in your home(s). And it’s not just abusive spouses who do this, either – married couples break up too, so don’t think that this scenario only applies to couples living together without being wed.
For better or worse
Theoretically, equity sharing does carry over after divorce, although I’m no lawyer so don’t take this as gospel truth. According to the law on marital property , both parties are entitled “after separation” to 50% of any marital property acquired during their marriage (including homes), including equitable interests in said property. But what “after separation” means, I couldn’t tell you. It’s not clear if the 50/50 split should be made according to who paid for each property after the divorce or whether it should be based on equitable interests acquired during marriage.
Getting around the “pactum commissorium”
Technically, Belgian courts can decide that any other arrangement agreed upon by divorce decree is binding so there are ways of circumventing all these rules! But only if the parents are able to agree on something, which isn’t always easy considering how much time they’ve spent fighting over this stuff in court already.
Facing up to inheritance issues
And let’s not forget that even though your spouse or partner has 100% equitable interest in your home(s), only 50% of said interest is inheritable under Belgian civil code. So you better write a will just in case they kick the bucket while you’re still alive!
As you can see, Belgium’s rules on property ownership are pretty complicated and definitely not easy for foreigners to understand or comply with. This is why it’s always best to rely on a proper real estate lawyer rather than someone who simply speaks English, French or German because this whole entire process can get very tricky if you don’t know what to expect beforehand. I myself am currently fighting the system over one particular complex provision in my divorce decree that went into effect last year without my consent ; let’s hope that the system I’m fighting is just as easy and transparent to navigate and that this post will serve to help future house-hunters in Belgium.
If you’re not married, it’s very important to consult a lawyer before buying any real estate together (https://www.bluehomes.com/Immobilien-Belgien/B/de/debut.html) because equity sharing can be one of the only ways for unmarried couples to pool their resources under Belgian law. So if your partner dies or leaves you, don’t be caught out with no legal recourse!