15.02.2018
During the time of the marriage the spouses are purchasing all the assets, including the real estate, into common property of the spouses, unless the spouses have agreed, in the form of the notarial deed, to different regime of the ownership (e.g. prenuptial agreement); or unless the assets were bought from the monies earned by any of the spouses prior the marriage or the assets were part of a donation or an inheritance to any of the spouses.
Once it comes to a divorce of the spouses, the common property has to be divided. In the following article, we briefly describe the legal regime concerning the division of the assets in the common property of the spouses focusing on the real estate located in the Czech Republic.
Legal frame
According to the Czech legislation, in particular the Civil Code, there are three options how the common property of the spouses can be divided. In particular the common property shall be divided (i) as a part of the divorce proceedings on the basis of a written agreement on division of the common property of spouses, confirmed by the respective court, OR (ii) after the divorce on the basis of a separate written agreement of the spouses, OR (iii) as a part of a separate court proceedings instigated by any of the spouses during the first three years as of their divorce, provided that the common property was not divided under the divorce proceedings. In case that the common property is not divided under the letters (i) to (iii) above, then pursuant to the respective provisions of the Civil Code the irrefutable legal assumption of joint ownership of the spouses of the real estate previously forming the common property automatically applies.
The division of the common property on the basis of an agreement
During the divorce proceedings, the spouses may conclude an agreement on the division of the common property including the division of the real estate. Such agreement can be presented to and proved by the divorce court in the process of the consensual divorce. In case that the consensual divorce cannot be reached, the divorce court shall rule on the divorce of the spouses itself and shall leave the division of the common property to be dealt with by the ex-spouses separately.
In any case the agreement on division or the real estate being part of the common property of spouses has to be in writing with verified signatures of both spouses. Such agreement shall determine in detail who shall be the owner of respective properties forming the common property. The spouses are not limited in any way with respect to the disposal of the ownership; i.e. it may be agreed that one of the spouses shall become the sole owner of all the real estate which form the common property of the spouses. It may be agreed that one of the spouses shall become the owner of the real estate, whereas the other spouse shall have the right to use it, under agreed terms. Also, in times when the real estate market is up, the spouses may agree to sell the real estate and to divide the revenues. Despite of the fact that the spouses are free to dispose the real estate in any agreed manner, their agreement has to always respect the rights of third parties (e.g. individual creditors, mortgage banks); in case that any rights of such third parties are infringed, then such third party is entitled to raise a claim with the respective court to decide that the agreement is not effective towards itself.
The division of the common property on the basis of a court´s decision
Should the spouses fail to reach a mutual agreement on division of their common property then any of the former spouses is entitled file a court action seeking the division of the common property on the basis of the court decision. When considering the matter, the court shall be deciding only about the common property specified in the plaintiff's application, whereas the manner of the property division is up to the court´s consideration. Nevertheless, the aim of the court is to rationally divide the common property using an approach similar to that adopted when dividing co- ownership. As to dividing the real estate, the court may decide in the following manner.
The real estate may be (i) allotted to one of the former spouses or (ii) allotted into a co-ownership of the real estate by the former spouses. The court may also order the real estate to be sold at a public auction, with the shares on the revenue being allocated to each of the former spouses. The court may also divide the real estate into housing units and/or to grant an easement or other form of non-financial servitude to one or both of the former spouses.
The value of the real estate property and shares allocated to each of the former spouses will be determined on the day of the court´s decision. When the property is to be divided by a decision of the court, the disparity of spousal shares is very rare. However, when pursuing the equity in the matter the court may rule on the disparity of the shares (e.g. in cases when one of the spouses made repairs or made improvement to the real estate from his/her own funds rather than using funds belonging to the common property). In this case, such "active" former spouse shall be therefore awarded a bigger share.
The division of the common property on the basis of the legal assumption
In case that during the first three years after the divorce the spouses are neither able to agree on division of the common property, nor any of the spouses files an action to court to decide on such division, a irrefutable legal assumption of joint ownership applies. Under this legal assumption, the former spouses become joint-owners of the real estate which was forming their common property. Each of the former spouses owns id. one half of such real estate.
To conclude, the division of real estate is mostly divided upon mutual agreement between the spouses which is strongly recommended since the costs of any starting and maintaining disputes is very costly and in most cases ineffective.
For more information, please contact:
JUDr. Mojmír Ježek, Ph.D.
Managing partner
ECOVIS ježek, advokátní kancelář s.r.o.
Betlémské nám. 6
110 00 Prague 1
e-mail: mojmir.jezek@ecovislegal.cz
www.ecovislegal.cz
About ECOVIS ježek advokátní kancelář s.r.o.
The law office ECOVIS ježek practices mainly in the area of commercial law, real estate law, dispute management, as well as finance and banking law, and provides full-fledged advice in all areas, making it a suitable alternative for clients of international law offices. The international dimension of the services provided is ensured through past experience and through co-operation with leading legal offices in most European countries, the US, and other jurisdictions. The members of the ECOVIS ježek team have many years of experience from leading international law offices and tax companies, in providing legal advice to multinational corporations, large Czech companies, but also to medium-sized companies and individual clients. For more information, go to www.ecovislegal.cz.
