Judgment of the Cologne Regional Court on Co-Liability in Loans – Case No.: 8 O 232/22
A divorced spouse is not liable for a loan that the ex-partner took out alone during the marriage. This was decided by the Cologne Regional Court in a ruling dated October 19, 2023 (Case No.: 8 O 232/22).
Couples often take out a loan together to, for example, finance the purchase of a property. In such cases, both spouses are jointly and severally liable to the lender, usually a bank. The bank can then demand repayment of the loan from either spouse. Whether the marriage has been dissolved in the meantime does not change the bank’s claim. However, the situation is different when one spouse alone has taken out the loan. In that case, the partner is not automatically co-liable, according to MTR Legal Attorneys, who advise, among other things, on banking law.
Uncle Grants Loan
In the underlying case before the Cologne Regional Court, the defendant wife acquired a property as sole owner in 2015. To finance the property purchase, the couple took out a loan of 250,000 euros. After selling another property, the couple repaid 150,000 euros to the lender. The lender then entered into a written loan agreement with the couple for the remaining 100,000 euros.
In 2017, the lender demanded repayment of the 100,000-euro loan. Here, the husband’s uncle stepped in. He transferred 25,000 euros four times to his sister, the husband’s mother, so that the loan could be repaid.
In 2022, the couple divorced. The uncle then demanded that the ex-wife, as the sole owner of the property, repay the 100,000 euros to him. He argued that he had granted the defendant ex-wife an interest-free loan. The defendant claimed that she was unaware of the payments.
Loan Discussed Only with Husband
In fact, the uncle had communicated only with his nephew as long as the marriage existed. However, he argued that it must have been clear to the ex-wife where the money had come from and that he would demand the money back in the future. Initially, it had been planned that his nephew would become a co-owner of the property acquired by his ex-wife. After the divorce, this did not happen. Therefore, he demanded repayment of the 100,000 euros from the divorced woman as the sole owner of the property.
The defendant stated that in 2017 she only learned from her husband that the loan had been repaid. To her knowledge, the plaintiff had given the money to his nephew as a gift, and no repayment had been agreed upon.
The Cologne Regional Court ruled in favor of the defendant. She had not entered into a loan agreement with the plaintiff. Therefore, he had no claim against her for the payment of the 100,000 euros.
No Authority for Wife
The court reasoned that the plaintiff, by his own admission, had only discussed the 100,000 euros with his nephew and the defendant’s now ex-husband. A loan agreement entered into by the ex-husband would only be binding on the defendant if the ex-husband had entered into it in her name and with authority to represent her. There was no indication that he had entered into the loan with his uncle not only in his own name but also on behalf of his then-wife.
Even if his ex-wife had known that the money had been provided by her then-husband’s uncle, she would not have implicitly become a co-borrower, the Cologne Regional Court further stated. Merely allowing a third-party payment does not imply a tacit declaration of intent to assume liability for repayment, the court clarified.
MTR Legal Attorneys advise on loans, guarantees, co-liability, and other banking law matters.
