Cohabitation has become a very common social phenomenon. Whether you are currently cohabiting, about to enter into cohabitation, likely to start a cohabitation relationship, or preparing to terminate one, do you understand the property nature of assets acquired during cohabitation? After the termination of a cohabitation relationship, who exactly owns the property obtained during cohabitation? Don’t worry; we will explain it to you through real cases.
Cohabitation generally leads to three outcomes:
- Maintain the status quo → continue cohabitation
- Change the status quo → enter into marriage
- Change the status quo → break up
After a breakup, both parties often face the issue of how to dispose of property acquired during cohabitation. The South China Matrimonial and Family Law Team reminds you of the following key points upon terminating a cohabitation relationship:
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When partitioning property acquired during cohabitation after the termination of the relationship, it shall first be confirmed whether the property was obtained during the cohabitation period.
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Where property is confirmed to be jointly owned by both cohabitants and both parties claim ownership, the people’s court shall determine each party’s share in proportion to their respective capital contributions.
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Where both parties claim ownership of a residential property, the court shall rule on the title of the house by taking into account factors such as the proportion of capital contribution and the actual possession and usage of the property.
Case Interpretation
Lu and Guo were formerly in a cohabitation romantic relationship. During cohabitation, they jointly contributed funds to purchase a residential property, which was registered under Lu’s name. The total purchase price of the property was RMB 1.25 million, consisting of a down payment of RMB 600,000 and a provident fund loan of RMB 650,000. Following the termination of their cohabitation relationship, the two parties failed to reach an agreement on the division of the property. Lu filed a lawsuit with the people’s court requesting partition of the house.
Court Judgment
The court held that the residential property was purchased with capital contributions made by Lu and Guo during their cohabitation, and shall be deemed tenancy in common by Lu and Guo, which is subject to partition upon the termination of their cohabitation relationship.
As to the share entitlement of the property, since the two parties failed to complete marriage registration procedures, their respective shares shall be determined according to their respective proportion of capital contribution.
According to the China Construction Bank transfer vouchers submitted by Lu, the property down payment of RMB 600,000 was fully contributed by Lu.
Guo argued that the RMB 600,000 down payment transferred by Lu was deposited with cash previously handed over by Guo to Lu and should be regarded as Guo’s personal contribution. However, Guo failed to submit corresponding evidentiary materials, and the court therefore rejected and did not uphold Guo’s defense claim.
Although Guo presented call recordings between the two parties, in which Guo repeatedly asked whether Lu acknowledged that the RMB 600,000 down payment was Guo’s personal contribution, Lu never explicitly confirmed such acknowledgment in the recordings.
Guo’s contention that Lu’s failure to refute shall be deemed an admission of Guo’s sole contribution to the down payment lacks legal basis and is likewise not upheld by the court.
Accordingly, the court confirmed that the RMB 600,000 property down payment was contributed solely by Lu.
Regarding the repayment of the provident fund loan:
Lu recognized that Guo repaid RMB 200,000 of the housing loan on April 9, 2010, and an additional RMB 4,600 on December 2 and December 31, 2013 respectively.
Nevertheless, Lu denied that the total amount of RMB 196,800 remitted by Guo to the bank account ending with 2466 from April 4, 2012 to November 5, 2013 was used for loan repayment, on the ground that such funds were not directly transferred into Lu’s designated provident fund loan repayment account.
The bank account ending with 2466 was provided by Lu to Guo after the termination of their cohabitation relationship. Guo remitted fixed sums on a monthly basis, including two large remittances of RMB 100,000 and RMB 50,000 respectively.
Lu contended that all remittances from Guo were intended as housing occupation fees, while Guo denied such assertion and maintained that all remittances were for housing loan repayment.
Since Lu failed to adduce evidence to support his explanation, the court held that there is reasonable ground to confirm that the total remittance of RMB 196,800 made by Guo to the account ending with 2466 during the aforesaid period was intended for housing loan repayment. Regardless of whether Lu actually used such funds to repay the loan, the amount shall be deemed as Guo’s contribution to housing loan repayment.
As neither party could confirm the respective proportion of principal and interest repaid on the housing loan, the court determined the principal portion ratio in the total loan by reference to the RMB 650,000 principal of the provident fund loan against the aggregate amount of repaid loan balance and remaining outstanding loan balance. On this basis, the court calculated the principal amount repaid respectively by Lu and Guo, as well as the outstanding principal balance owed by Lu.
The remaining outstanding housing loan balance amounts to RMB 312,479.35. Such liability was borrowed under Lu’s name, and both parties consented in court that Lu shall be solely responsible for repayment. The outstanding balance of RMB 312,479.35 shall therefore be regarded as Lu’s personal contribution and repaid independently by Lu. Lu claimed that this amount should be deducted first from the total property value upon partition.
Ultimately, the court determined each party’s share of the property in accordance with their respective proportion of capital contribution.
As to the specific partition method, considering objective circumstances such as the actual possession status of the property and referring to the mediation proposals of both parties, the court lawfully ruled that the residential property be awarded to Guo. Guo shall pay corresponding property compensation to Lu in accordance with the agreed total property value and Lu’s proportion of capital contribution to the property.
Legal Suggestions
Citizens’ legitimate civil rights and interests are protected by law. A party shall bear the burden of proof for the claims it asserts. Where there is no evidence or the evidence is insufficient to prove the factual claims of a party, the party bearing the burden of proof shall bear the adverse legal consequences.
In this case, Guo claimed that he withdrew cash, handed it over to Lu, and the down payment was subsequently paid to the developer through Lu’s bank account. However, Guo failed to provide direct evidence to support his claim, including his own cash withdrawal records. After disputes arose between the two parties, Guo attempted to obtain evidence via telephone recordings. By that time, the other party had become highly vigilant, making evidence collection extremely difficult. Ultimately, the court confirmed that the property down payment of RMB 600,000 was contributed by Lu.
In addition, Guo maintained regular bank transfers to Lu both during and after the termination of their cohabitation relationship with relatively large transaction amounts. The court finally affirmed that such remittances constituted Guo’s capital contribution toward housing loan repayment.
In light of the findings of this case, legal practitioners suggest that during cohabitation, both parties shall properly preserve relevant proof of capital contributions when purchasing high-value assets. Cash transactions should be avoided whenever possible, and the purpose of funds shall be clearly noted at the time of bank transfer.
Furthermore, the ownership of property is not necessarily consistent with its registration status. When ruling on real estate ownership, the court will comprehensively consider multiple factors, including each party’s property share, their respective asset status, the current usage of the property, and the ability to pay compensation. Parties may prepare evidentiary materials targeting the above aspects.