Although many people still uphold the marital philosophy of marrying for love, a large number of others have no choice but to bear the pressure of no house, no marriage.
Housing prices keep soaring while wages remain stagnant. Afflicted by such real-life pressures, the post-80s and post-90s generations inevitably turn to their families for financial support if they intend to buy a property for marriage.
A property acquired with great difficulty may bring not only emotional heartbreak but also severe financial losses once the relationship breaks down.
As most people fail to make reasonable arrangements for property before marriage, the division of family assets will undergo drastic changes upon divorce, potentially resulting in unpredictable economic losses.
If a couple proceeds to divorce,
how shall the real estate be divided?
I. Determination of the Value of the Real Estate
In judicial practice, when determining the value of a real estate, the court shall first respect the opinions of both parties. If the husband and wife can reach a consensus on the market value of the disputed property, the court shall generally adopt such consensus to confirm the property value.
If the two parties still fail to reach an agreement on the property value through negotiation, the people’s court shall handle the matter separately in accordance with the following circumstances:
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Where both spouses agree that the property shall belong to one party, an appraisal institution shall assess the property value at the market price. The party obtaining ownership of the property shall make corresponding compensation to the other party.
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Where both spouses claim ownership of the property and agree to acquire it by bidding, the court shall generally grant permission, with the highest bidder awarded the property. If the parties decline to adopt the bidding method, an appraisal institution shall evaluate the property at market price, and the court shall rule on the ownership of the property based on the specific circumstances of the individual case.
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Where neither spouse claims ownership of the property, the property shall be auctioned upon the application of the parties, and the proceeds therefrom shall be divided between the parties.
II. How Real Estate Is Actually Partitioned in Judicial Practice
Unlike the past when a family usually owned only one property, courts would sometimes rule that the real estate remains jointly owned by both parties even after divorce.
Nowadays, courts tend to adopt a sole-award disposition in handling marital real estate disputes. That is, the court awards the jointly owned marital property to one spouse exclusively, and the acquiring party shall compensate the other party proportionally based on the net market value of the property. If there is still an outstanding mortgage loan on the property, the party awarded the property shall generally be responsible for repaying the remaining loan.
If the property is the personal property of one spouse rather than marital joint property, but both parties jointly repaid the housing loan after marriage, may the other spouse claim compensation for the portion repaid during marriage? And how should such a claim be asserted?
In accordance with the provisions of the Marriage Law of the People’s Republic of China, where one spouse signs a housing purchase contract before marriage, pays the down payment with personal property and obtains a bank mortgage loan, and the loan is repaid with marital joint property during marriage while the property is registered under the name of the down‑payment payer, the property shall be disposed of by agreement of both parties upon divorce.
If no agreement can be reached, the people’s court may rule that the property belongs to the registered title holder, and the outstanding loan shall be deemed the personal debt of the registered party. The registered party shall compensate the other party for the amounts jointly repaid by both spouses during marriage and the corresponding property appreciation portion attributable to such repayments.
III. Partition of Several Special Types of Real Estate in Judicial Practice
Partition of Economically Affordable Housing
Economically affordable housing refers to policy-based indemnificatory housing supplied by the government to low-income housing-needy urban families with preferential policies, restricted unit size and selling price, and constructed in compliance with reasonable construction standards.
In accordance with relevant policies, where economically affordable housing has been purchased for less than five years, the owner only holds limited property rights over the housing.
Therefore, even if such housing constitutes marital joint property, it shall not be partitioned within the five-year restriction period.
If partition is indeed necessary, the parties may only apply for government repurchase, and divide the proceeds obtained from the repurchase.
Where the five-year restriction period has expired, in judicial practice, the court shall deduct the relevant payable fees to the government from the current market value of the housing to determine the actual property interests enjoyed by the spouses. The court shall then partition the housing in accordance with the principles for dividing marital joint property, and the party acquiring the property right shall make corresponding compensation to the other party.
Partition of Resettlement Housing from Demolition
The partition of such housing shall take into account the basis, time and cost of acquisition.
For example, if resettlement housing is obtained by way of property right replacement after the expropriation of one party’s personal property owned before marriage, and no additional fees are paid, the acquisition of the resettlement housing is essentially merely a form transformation of the pre-marital personal property after marriage. The housing still belongs to the personal property of that party and shall not be partitioned upon divorce.
If one party’s pre-marital personal property is expropriated after marriage and resettlement housing is obtained via property right replacement, there is usually a value difference between the demolished property and the resettlement housing due to discrepancies in area, location, structure and other aspects. Where such value difference is supplemented with marital joint funds, the resettlement housing is generally deemed the personal property of the original owner of the demolished property. Nevertheless, the supplementary contribution made with marital joint property and the corresponding appreciation portion shall be recognized as marital joint property and disposed of in accordance with the rules for dividing marital joint assets.
Where resettlement housing is acquired through property right replacement after the expropriation of one party’s pre-marital personal property and is registered under the names of both spouses, such housing is generally deemed marital joint property in judicial practice.
Naturally, if property arrangements are properly made either before marriage or during the subsistence of marital relationship, parties can avoid disputes and troubles over property division upon divorce.