Divorce = Losing Both People and Property? How to Handle Real Estate During Divorce?
No House, No Marriage!
Even though many people still adhere to the marriage view of "marrying for love", a large number of people still have to bear the pressure of "no house, no marriage". With housing prices constantly rising while wages remain stagnant, post-80s and post-90s generations, who are tormented by reality, naturally turn to their families for help when they want to buy a house and get married.
The house that was hard to buy – if the relationship between the two parties breaks down, you will not only suffer emotional pain, but also may face huge losses in your wallet!
Ideal is always plump, but reality is always skinny. Due to the fact that most people fail to make reasonable planning for their property before marriage, once both parties embark on the road of divorce, the family assets will undergo significant changes, and even unpredictable losses may occur.
If Both Parties Embark on the Path of Divorce, How Should the House Property Be Divided?
1.Determine the Value of the House
In judicial practice, when determining the value of the house, the court will first respect the opinions of both parties. If the husband and wife can reach a consensus on the market value of the involved house, the court will usually adopt this opinion to determine the value of the house.
If the two parties still fail to reach a consensus on the value of the house through negotiation, the People's Court will handle it in the following circumstances respectively:
- If both parties agree that the house shall belong to one party, an appraisal institution will assess the market value of the house, and the party who obtains the ownership of the house shall compensate the other party accordingly.
- If both parties claim the ownership of the house and agree to obtain it through competitive bidding, the court will generally allow it, and the highest bidder shall obtain the house. If competitive bidding is not adopted, an appraisal institution will assess the market value of the house, and the court will determine the ownership of the house according to the specific circumstances of the case.
- If neither party claims the ownership of the house, the court will auction the house upon the application of the parties and divide the proceeds from the auction.
2.How to Actually Divide the House in Practice
Different from the past when a family only had one house (where the court might rule that the house remains jointly owned by both parties even after divorce), courts nowadays tend to adopt a "side assignment" approach when dealing with marital real estate. That is to say, the court will rule that the jointly owned house be awarded to one party, and the party who obtains the house shall compensate the other party in proportion according to the net market value of the house. If there is still an outstanding bank mortgage on the house, the party who obtains the house shall generally be responsible for repaying it.
If the house is not jointly owned by the couple but is the personal property of one party, but the two parties repaid the mortgage together after marriage, can the other party claim compensation for the part of the mortgage repaid after marriage? And how to claim it?
According to the provisions of China’s Marriage Law, if one spouse signs a house sales contract before marriage, pays the down payment with personal property and takes out a bank loan, repays the loan with marital joint property after marriage, and the house is registered in the name of the down payment payer, the house shall be handled through negotiation between the two parties when they divorce. If no agreement can be reached, the People’s Court may rule that the house belongs to the party whose name is registered on the property right, and the outstanding loan shall be the personal debt of the party whose name is registered on the property right. The amount of money jointly repaid by both parties after marriage and the corresponding appreciation part of the property shall be compensated by the party whose name is registered on the property right to the other party.
3. Division of Several Special Types of Real Estate in Practice
Division of Economically Affordable Housing
Economically affordable housing refers to policy-based housing provided by the government with preferential policies, which is supplied to low- and middle-income families with housing difficulties at a price lower than the market level.
Since economically affordable housing is a policy-based security housing with clear restrictions on eligibility, ownership, and transaction, its division during divorce is more special than that of ordinary commercial housing.
If the economically affordable housing is purchased during the marriage and belongs to the marital joint property, the court will, based on the principles of fairness and reasonableness, refer to the market value of the house, combined with factors such as the length of the marital relationship, the actual contribution of both parties, and the living needs of the family, to determine the ownership of the house and the compensation standards.
If one party obtains the ownership of the economically affordable housing, he/she shall compensate the other party according to the actual value of the house after deducting the relevant policy fees (such as land transfer fees that need to be paid when converting to commercial housing).
Division of Resettlement Housing in Divorce
When dividing resettlement housing, consideration should be given to the basis for acquiring the housing, the time of acquisition, and the cost of acquisition.
For example, if the resettlement housing is obtained through property right replacement after the expropriation of one party’s personal property before marriage, without any additional payment, the resettlement housing is essentially a transformation of the form of the pre-marital personal property. In this case, the housing remains the personal property of that party and shall not be divided upon divorce.
If one party’s pre-marital personal property is expropriated after marriage, and resettlement housing is obtained through property right replacement, with the difference in value between the expropriated housing and the resettlement housing made up by the other party using community property, the resettlement housing shall generally be deemed the personal property of the party whose pre-marital property was expropriated. However, since the community property was used to make up the value difference, the amount of the supplementary payment and the corresponding value appreciation shall be recognized as community property and divided in accordance with the principles for division of community property.
If one party’s pre-marital personal property is expropriated after marriage, and resettlement housing is obtained through property right replacement and registered in the names of both spouses, such housing shall generally be deemed community property in practice.
Of course, if the property is properly disposed of before marriage or during the marital relationship, you will not be overwhelmed by property issues when getting a divorce.