After house prices fall, how should one party divide the property they bought before marriage and jointly repay after marriage in the event of divorce?
Author | Lawyer Liu Kun
Although people have long expected the decline in the real estate market, the real decline seems to have happened overnight, and the recovery is far away.
The so-called midlife crisis is nothing more than waking up in the morning, having a cold that hasn't healed yet, having a high fever again, having to queue up when going to the hospital, having to deduct wages when asking for leave, and having a wife/husband divorce. As a result, it is not property that is divided, but debt.
Sickness comes like a mountain, and illness goes like a twitch. People are like this, and so is the industry.
In the past few years, when I came to consult on divorce cases, I asked how to fight for real estate. After all, housing prices are bullish. Even if the market value deducts the remaining loans and gives half of the compensation, the party who gets the real estate will earn money by selling the real estate in the future.
But in the second half of this year, the most common question from customers was that the house price had fallen so much that I didn't want a house. How much should the other party compensate me?
Some people even asked, can I repay the loan to the other party, so I don't want the house?
I also understand that the party who wants the house has to pay off the mortgage. Even if the current decline is shared equally when both parties divorce, what if the future decline is more? What should I do if the house cannot be sold?
Sharing the increase is easy, sharing the depreciation is difficult
Regarding the situation where one party purchases a house before marriage and jointly repays the loan after marriage, Article 78 of the Interpretation of the Supreme People's Court on the Application of the Marriage and Family Section of the Civil Code of the People's Republic of China (1) only stipulates how to divide the increase in housing prices.
If the negotiation fails, the court may decide that the real estate belongs to the registered party, and the remaining loan is the personal debt of the registered party. After marriage, both parties jointly repay the loan and the corresponding property appreciation part, and the registered party shall compensate the other party.
The calculation method for the joint repayment of the loan by both parties after marriage and the corresponding property appreciation part is:
Amount to be compensated = (amount of joint loan repayment ÷ total purchase payment) × present value of the property × 50%
Total purchase payment = down payment + loan principal + loan interest + taxes and fees
The present value of the property = the amount confirmed by both parties, or the amount assessed if confirmation is not possible
Can we infer from this that if house prices fall, the two parties will jointly repay the loan after marriage and deduct the corresponding depreciation part, and the registered party will compensate the other party?
Value-added sharing, depreciation of course should also share the burden, it is natural!
The non-registered party will have an opinion. You bought the house before marriage, got on the bus on the top of the mountain, and you didn't discuss it with me. I helped repay so many loans, and now I have to bear the loss. Why? Besides, buying a house is a long-term thing, maybe it will go up in the future. Will you share the value-added part of my joint loan repayment?
Well, for good reason.
Dusty judicial interpretation exposure draft
In fact, Article 78 of the Interpretation of the Supreme People's Court on the Application of the Marriage and Family Section of the Civil Code of the People's Republic of China (1), quoted above, is inherited from Article 10 of the Judicial Interpretation of the Marriage Law of the Supreme People's Court (3), without substantive modification.
For the same reason, the Supreme Court had intended to include in the interpretation, which considered falling house prices at the consultation stage, a provision that "the amount of compensation when the house price is reduced shall not be less than one-half of the loan repayment of the husband and wife's joint property."
The objection was the same as before. The Supreme Court ultimately adopted this opinion, deleting "the amount of compensation when the house price is reduced shall not be less than one-half of the loan repayment part of the husband and wife's joint property".
I personally also think that if the non-registered party does not lose money in any case when house prices fall, then why share the benefits brought by the appreciation?
Just like the real debt, we can not guarantee the principal, but also enjoy the equity appreciation income.
However, after the Supreme Court deleted "the amount of compensation when the house price is reduced shall not be less than one-half of the loan repayment part of the husband and wife's joint property", it did not directly stipulate that both men and women should share the loss of the falling house price.
It seems that the Supreme Court has not reached a unified opinion either.
Therefore, this is an open question, and the following are my personal opinions for reference only.
Common debt is the key to decryption
There are so many things in real life that there are only unexpected situations, and there are no non-existent situations. It is actually unrealistic to expect laws and judicial interpretations to take into account all situations.
In some cases, two people look at the house together when they are talking about marriage, but they are only registered in one person's name due to issues such as housing eligibility.
In some cases, one parent prepares a marriage room for their child in advance, fearing that the child will spend money indiscriminately before allowing him to take on the mortgage.
Some are registered as having a successful career and buying one or more properties before marriage.
There are also some who have a huge gap in economic strength between the two parties. Only one person in the family earns money, and the property is also in this person's name. At least the other party has no direct financial contribution.
The overall situation is various.
So where is the benchmark for our judgment?
Personally, whether the two parties should share the benefits of rising house prices or share the losses of falling house prices depends on the premise that the mortgage is a joint debt of the husband and wife, and the corresponding share of the mortgage is the joint property of the husband and wife.
To judge the joint debt of husband and wife, it depends on the three "common", that is, living together, operating together, and expressing common meaning.
If the real estate purchased by one party before marriage is for the husband and wife to live together, or the real estate is jointly purchased by both parties before marriage, the post-marriage loan is a joint debt of the husband and wife, and the corresponding post-marriage loan repayment and its corresponding value-added/depreciation part belong to the joint property/debt of the husband and wife.
If one party purchases the property before marriage, the non-registered party has neither jointly decided nor used the property for living together. In this case, the loan is not a joint debt of the husband and wife, and the property should not be considered joint property of the husband and wife, but personal property of the registered party.
Because the registered party objectively used the husband and wife's common property to repay the loan after marriage, half of the post-marriage loan repayment amount should be returned to the non-registered party at the time of divorce.
This way of judging whether the post-marriage loan belongs to the joint debt of the husband and wife, and whether the corresponding value-added part of the post-marriage loan belongs to the joint property of the husband and wife, the advantages are:
First, it will not allow the non-registered party to suffer losses due to marriage without exercising their rights to the property.
Second, it is more in line with the equal value pursuit of husband and wife. If both parties live together in the real estate purchased by one party's pre-marriage mortgage after marriage, or the real estate is jointly purchased by both parties. It is necessary for both parties to share the post-risk income of the joint loan repayment after marriage, and neither party should only enjoy rights but not obligations.
Third, this approach does not violate the current legal framework.
If you have any other cases or opinions on this type of real estate division, please discuss and learn together.
Lawyer Profile
Lawyer Liu Kun
Attorney of
Secretary General of the Real Estate Dispute Resolution Professional Committee of Zhiheng Real Estate and Construction Engineering Research Center
area of expertise
Corporate litigation, marriage and family legal services
Workout and non-performing asset disposal
contact information
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