It is quite common for one spouse to request adding their name to the real estate purchased solely by the other spouse before marriage, either before or after marriage. However, if the property is purchased by way of loan, the formal title registration modification cannot be completed until the mortgage loan is fully repaid.
For this reason, many couples sign a prenuptial agreement or marital property agreement, stipulating that the real estate purchased by one party before marriage shall be regarded as marital joint property.
Nevertheless, in judicial practice, does signing a marital property agreement guarantee absolute legal effect? May either party unilaterally exercise the right of revocation before completing title transfer registration? Let us look at a real case.
Case Brief
Zou and Zhao registered their marriage in 2007 and began living separately due to marital discord in 2012. In 2013, Zou filed a divorce lawsuit against Zhao.
During the litigation, Zou submitted a Housing Co-ownership Agreement signed by both parties on November 30, 2011. The agreement stipulated that the residential property purchased by Zhao in his personal name before marriage should be jointly owned by Zhao and Zou, each holding a 50% property share, yet no title modification registration was ever completed.
Zou now claims partition of the aforesaid property, while Zhao argues that he is entitled to revoke the gift since the property title has not been transferred
Court Judgment
The court of first instance held that in accordance with Article 6 of the Judicial Interpretation (III) of the Supreme People’s Court on the Application of the Marriage Law of the People’s Republic of China:
Where parties agree, either before marriage or during the subsistence of marriage, that real estate owned by one party shall be gifted to the other, and the donor revokes the gift before completing title registration of the gifted real estate, if the donee requests performance, the people’s court may apply the provisions of Article 186 of the Contract Law.
In this case, the disputed property is still registered under Zhao’s name without title modification. Zhao is legally entitled to revoke the gift pursuant to the aforesaid provision. Accordingly, the clause granting Zou a 50% property share under the Housing Co-ownership Agreement has not taken legal effect.
Dissatisfied with the first-instance judgment, Zou filed an appeal. The appellate court held that no title transfer had been completed after the signing of the Housing Co-ownership Agreement. The first-instance court’s ruling that the agreement had not become effective was well-grounded in both facts and law, and the case was properly disposed of. The appellate court therefore dismissed the appeal and upheld the original judgment.
Legal Analysis
In judicial practice, there exist two major viewpoints regarding whether a party may unilaterally exercise the right of revocation under a marital property agreement concluded for the purpose of adding a spouse’s name to a premarital real estate after marriage.
Viewpoint One
Article 19 of the Marriage Law of the People’s Republic of China stipulates that spouses may agree that property acquired during marriage and premarital property shall be owned respectively, jointly owned, or partially respectively owned and partially jointly owned.
A marital property agreement signed by both spouses represents their genuine intention voluntarily expressed. It does not violate any mandatory provisions of laws and administrative regulations, nor harm public interests or the legitimate rights and interests of third parties. Hence, the agreement shall be valid and binding upon both parties, and neither spouse shall have the right of unilateral revocation.
Viewpoint Two
Article 6 of Judicial Interpretation (III) of the Marriage Law provides that where parties agree to gift one party’s real estate to the other before or during marriage, the donor may revoke the gift prior to title registration. If the donee requests performance, the court shall apply Article 186 of the Contract Law.
Article 186 of the Contract Law stipulates that a donor may revoke a gift before the transfer of rights over the gifted property. The foregoing provision shall not apply to gift contracts for public welfare or moral obligation purposes such as disaster relief and poverty alleviation, or notarized gift contracts. Accordingly, one spouse may unilaterally exercise the right of revocation.
The author endorses the first viewpoint. The Contract Law primarily regulates commercial civil legal acts between equal civil subjects. By contrast, marital property agreements involve multiple factors such as marriage, property, personal status and emotional relations between spouses, representing a balance of comprehensive interests of both parties.
Once a marital property agreement takes effect, both parties must exercise their rights and perform their obligations in accordance with the agreement, and the distribution of marital property interests shall also be governed by the valid agreement.
Article 136 of the General Principles of the Civil Law stipulates that a civil juristic act shall take effect upon its formation, unless otherwise prescribed by law or agreed by the parties. A party may not arbitrarily alter or rescind a civil juristic act unless permitted by law or consented to by the other party.
Therefore, both spouses shall strictly abide by the marital property agreement and may not alter or revoke it at will. Any necessary alteration or revocation shall be made in writing only after consensus is reached through negotiation by both parties.
Legal Suggestions
Given that courts across regions have not yet formed unified adjudication standards for such cases in judicial practice, similar cases may lead to different judgments. How can parties avoid the agreement being revoked and their true intentions frustrated? The author offers the following suggestions:
- After concluding a property agreement, complete title transfer procedures as soon as possible: deliver movable property and go through title modification registration for real estate.
- For property whose title transfer cannot be completed for objective reasons, complete notarization simultaneously upon signing the property agreement.
- Set strict liability for breach of contract in the agreement to raise the breach cost for any party who arbitrarily breaks the agreement.