Housing Loans in Divorce in Japan: Options for Properties with Outstanding Mortgages

Handling mortgaged property in divorce involves three options: (1) Sell and split - simple if sale price exceeds debt (property division under Civil Code Art. 768); if underwater, consider voluntary sale with lender consent. (2) One spouse stays - easier if the loan holder stays; if non-holder stays, loan refinancing or name change needed (requires bank approval). (3) Pair loans (both spouses as borrowers) - most complex, often requiring full sale. Joint guarantor status does not automatically terminate upon divorce. Property value for division: market value minus remaining loan balance. Custody arrangements may support housing rights for the custodial parent.