A couple married in France without a marriage contract buy a property with separate funds from each spouse and a loan for the balance. On divorce, the husband argues that the property is common, the wife that it is her separate property (bien propre), and the gap between her contribution and the community’s is only €222.86. In a reported decision of 7 November 2018, the First Civil Chamber of the Cour de cassation (France’s highest court for civil matters) specifies what counts as the community’s contribution: the price and costs of the acquisition, not the early repayment penalty on the loan (indemnité de remboursement anticipé). The property is the separate property of the wife, whose contribution exceeds the community’s, even though it does not reach half the price.
The facts
Two spouses married in 1981 without a prior marriage contract, and therefore under the default French regime of community of acquisitions (communauté réduite aux acquêts). By deed of 19 June 1986, they jointly bought a property, with a declaration of reinvestment (remploi) made by each of them, that is, a statement in the deed that separate funds are being used for the purchase; the balance was financed by a loan. Their divorce was later granted, and disputes arose over the settlement of their property interests.
Out of a total purchase price of €136,981.26, the wife contributed €60,979.61, the husband €15,244.90, and the community spent €60,756.75. On 20 June 2017, the Bordeaux Court of Appeal held the property to be the wife’s separate property, her contribution exceeding the sum spent by the community, without adding the loan’s early repayment penalty to that sum.
The husband appealed. In his view, the penalty was an expense used to acquire the financed property, and a spouse who claims that a property bought during the marriage is separate property must prove having financed more than 50% of its purchase value; yet the wife’s contribution was below half.
The decision
The Cour de cassation dismissed the appeal (Cass. 1re civ., 7 November 2018, appeal no. 17-25.965, reported).
On the penalty, it held that “it follows from article 1436 of the Civil Code that the community’s contribution comprises only the sums used to pay part of the price and costs of the acquisition” (translated from the French). It added that “the Court of Appeal correctly held that the early repayment penalty on the loan, constituting a cost of enjoyment borne by the community, could not be treated as such costs”. A cost of enjoyment (charge de jouissance) is an expense linked to the use of the property and its financing during the marriage, not to the purchase price.
On the classification, it noted that the Court of Appeal had “rightly stated that, under the same provision, a property paid for with separate funds whose amount exceeds the sum spent by the community to complete the purchase price is separate”, and then found that the wife had contributed more than the community. As for the half-price threshold relied on by the husband, the Court of Appeal “was not required to carry out an irrelevant inquiry”: it gave a proper legal basis for its decision.
What this changes for valuation
Two sums to compare, not a half to reach. Article 1436 of the Civil Code deals with a purchase whose price and costs exceed the sum invested or reinvested: the community is entitled to compensation (récompense) for the excess; if, however, its contribution is greater than the spouse’s, the property falls into the community, subject to the compensation owed to the spouse. In this case, the wife funded about 44.5% of the total price, the community 44.4% and the husband 11.1%: none reaches half, and the property is the wife’s separate property.
A gap of €222.86, hence the stakes of the penalty. Any sum above that gap, added to the community’s account, would have reversed the comparison. By approving the exclusion of the penalty, the Court keeps to the price and costs. The decision says nothing about the loan interest: the report shows it on a separate line, so that the notaire (French civil-law notary) or the judge can draw the consequences.
Acquisition costs, on the other hand, do count. They enter the comparison just as the price does; for compensation, a 2016 decision likewise includes acquisition costs and the estate agent’s commission in the sum used under article 1469, as explained in the article on acquisition costs and the subsisting profit. Each contribution is therefore related to the total cost of the acquisition, price plus costs. The separate origin of the funds must be proved: money in a spouse’s personal account is presumed common, as the article on funds in a personal account recalls.
The classification sets the direction of the accounts. The decision quantifies no compensation. If the property is separate, the wife keeps it and owes compensation to the community for the share it financed; if it were common, it would have entered the partition, with each spouse entitled to compensation for their contribution. In both cases, if the property is still in the estate that benefited from the funds at the date of liquidation, the compensation cannot be lower than the subsisting profit (profit subsistant, article 1469, paragraph 3, of the Civil Code). How that profit is calculated is a different point, settled the same day: for community funds used for a separate property, the decision on the equalising payment (soulte) for a bare ownership paid by the community makes it follow the funding proportion. The decision does not discuss what becomes of the husband’s separate contribution, €15,244.90, in a property held to be his wife’s; the report shows it separately.
What the report delivers. For a property bought in 1986, the purchase price says nothing about the value at liquidation. The report first reconstructs the funding of the acquisition, with supporting documents: purchase deed, statement of costs, loan amortisation schedule, bank statements, origin of the separate funds. From this it derives each estate’s share, to the cent. It then establishes the market value of the property at the date of liquidation, by comparison, isolating where relevant the works carried out since the purchase, for which the article on compensation for works gives the method. The liquidating notaire or the judge classifies the property and computes the compensation from these elements.
What the valuer takes from it
- The community’s contribution to a purchase with partial reinvestment comprises only the sums paid towards the price and costs of the acquisition.
- The loan’s early repayment penalty, a cost of enjoyment borne by the community, does not increase that contribution; interest, on which the decision does not rule, is shown separately.
- The property is separate where the spouse’s separate contribution exceeds the community’s contribution, even if it is less than half the price.
- The gap can be tiny: the funding is reconstructed to the cent, with supporting documents.
- Once the property is classified, the compensation cannot be lower than the subsisting profit if the property is still, at the date of liquidation, in the estate that benefited from the funds (article 1469, paragraph 3), a point the decision does not settle; the report then establishes the value of the property at that date, by comparison.
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, valeur vénale and date de valeur complement this article. Given the same day by the First Civil Chamber, on the subsisting profit: Compensation: community paid the equalising sum on bare ownership. 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 property bought during the marriage with separate funds and a loan: separate or common?
I reconstruct how the purchase was funded, price, costs, each spouse's contribution and the share paid by the community, then I establish the market value of the property at the date of liquidation, for the liquidating notaire or the court.
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