A spouse married under the community of property regime (communauté) pays for the purchase of a community asset with separate funds (fonds propres), price, costs and agency fee included. On divorce, the community owes that spouse compensation (récompense, the sum that settles accounts between a spouse’s own estate and the community): are the costs added to the value of the property, or included in it? In a reported decision of 19 October 2016, the First Civil Chamber of the Cour de cassation (the French supreme court for civil matters) held that the sum used to acquire the property includes those costs, and that the compensation owed for the whole contribution cannot exceed the subsisting profit (profit subsistant, the present value of the share of the asset that the funds paid for). For the valuer, the costs enter the funding proportion; they are not added to the result.
The facts
Spouses married on 2 September 2006 under the community of property regime divorced by a judgment of 18 March 2009, then disagreed over the liquidation. The husband had paid with his separate funds for the purchase of a community property and, according to the trial judges, for the costs connected with that acquisition and the agency’s fee.
By a judgment of 8 April 2015, the Montpellier Court of Appeal held the community liable to him for compensation of €37,000. It found first that, under the third paragraph of article 1469 of the French Civil Code, he could claim compensation equal to the subsisting profit, corresponding to the value of the property, assessed at €319,000 at the date the community was dissolved. It added that, having also paid the costs and the fee, he could further claim additional compensation under the second paragraph of the same article. The wife appealed to the Cour de cassation.
The decision
The Cour de cassation quashed the judgment on that point, under article 1469, third paragraph, of the Civil Code (Cass. 1re civ., 19 October 2016, appeal no. 15-27.387, reported).
It first laid down the rule: “within the meaning of that provision, the value borrowed that served to acquire an asset includes the costs connected with that acquisition” (translated from the French). It specified that “that provision does not distinguish according to whether the value borrowed financed that acquisition in whole or in part”. It inferred that the compensation owed by the community for the husband’s whole contribution, “including the costs connected with the acquisition and the estate agent’s fee, could not exceed the subsisting profit valued at 319,000 euros”. By awarding additional compensation, the Court of Appeal breached the provision. The case was remitted to the Nîmes Court of Appeal.
The Court of Appeal had combined two rules of article 1469: for the price, the subsisting profit, the minimum compensation where the value borrowed (valeur empruntée, the sum taken from one estate to fund an asset of another) served to acquire an asset still found in the borrowing estate on the day of liquidation (third paragraph); for the costs, the expense incurred (dépense faite), the minimum where it was necessary (second paragraph). The Court rejected that combination: the costs fall under the third paragraph, like the price.
The same decision also quashed the holding that the wife owed €12,500 for cheques issued to her before the marriage, a question of proof of a loan not discussed here.
What this changes for valuation
The acquisition cost is rebuilt item by item. The computation starts from the deed and the payment records: price, costs, agency fee, with the origin of the funds for each item. The spouse who claims must prove that separate funds paid, and may do so by any means, as the articles on separate funds banked without reinvestment and on personal account funds presumed common show. Where that proof is disputed, the report sets out the computation under each hypothesis.
Full funding: the value of the property, with nothing added. Where the spouse paid for everything, price and costs, the compensation equals the subsisting profit, that is the value of the property: here €319,000 at most. The holding fixing the compensation at €37,000, which the Court of Appeal had justified by adding to the subsisting profit additional compensation under the second paragraph, was quashed. For an acquisition, the subsisting profit is both a floor, under the third paragraph, and a ceiling, according to the decision. The valuer establishes the market value of the property by comparison; works funded after the acquisition fall under a separate computation, set out in the article on compensation for works.
Partial funding: the costs enter the proportion. Since the provision does not distinguish between full and partial funding, the costs paid by the spouse enter their contribution. The compensation is then obtained by applying to the value of the property the proportion in which their funds contributed to financing the acquisition, the method the Cour de cassation applies in more recent decisions, in 2020 for separate property partly sold and in 2024 for works, without contradicting the 2016 decision. For the denominator, the 2016 decision says nothing; consistency with article 1436, which for investment and reinvestment (emploi et remploi) refers to the price and costs of the acquisition, leads to the total cost, price plus costs, the base also applied in the article on reinvestment and the early repayment penalty.
Example: a property bought for €250,000, plus €20,000 of costs and fee, that is €270,000. The spouse contributes €120,000 of separate funds, including the costs. Their share is 120,000 / 270,000, or 44.4%; if the property is worth €360,000 at the date of liquidation, the compensation is €160,000. The method rejected by the decision, transposed to this case, would have given 40% (100,000 / 250,000) of the value, €144,000, plus €20,000 of costs, €164,000. Under the 2016 solution, the costs follow the fate of the property: they gain value with it when the market rises and are not refunded separately when it falls. The total is lower here than under the rejected method because the costs also enter the denominator: the price paid is set against €270,000 rather than €250,000.
The valuation date. The Court of Appeal had valued the property at the date the community was dissolved; the Cour de cassation did not rule on that date. The third paragraph of article 1469 refers to an asset still found in the borrowing estate on the day of liquidation: the report uses that date and sets out separately any value requested at another date.
What the valuer takes from it
- Acquisition costs and the agency fee form part of the value borrowed; they give rise to no separate compensation.
- A spouse who alone funded a community asset receives the value of the property, with nothing added for the costs.
- Under partial funding, the costs the spouse paid enter their contribution, set against the total cost, price and costs.
- The report rebuilds the acquisition cost item by item, with the origin of the funds, and isolates works funded after the acquisition.
- The value is dated at the day of liquidation; any value at another date is set out separately.
Further reading
The Market value page describes the assignment, its timescale and its fee. The guide Matrimonial property liquidation in France: which valuation date? and the glossary entries récompense, date de valeur and valeur vénale complement this article. Two other reported 2016 decisions on accounts between spouses are discussed separately: Matrimonial compensation: separate funds proved by any means and Rental investment for savings: not a marriage expense in France. On the same theme: Compensation: separate property partly sold, the profit is shared and Divorce in France: compensation for works on one spouse’s house. The decision is available on Légifrance.
What next
A community asset paid for with separate funds, costs and agency fee included, and a compensation to compute?
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