A husband alone finances a jointly owned flat (appartement indivis) intended for letting. After the divorce, he sees it as a revocable gift to his wife; the Court of Appeal sees it as an act rewarding the wife who stayed at home, treating those savings as part of the expenses of the marriage (charges du mariage). In a reported decision of 5 October 2016, the First Civil Chamber of the Cour de cassation (French supreme court for civil and commercial matters) quashes: “the financing, by a spouse, of a rental investment intended to build up savings, does not fall within the contribution to the expenses of the marriage” (translated from the French). For the valuer, that financing still has to be characterised, and therefore quantified.
The facts
Spouses married under the participation in acquisitions regime (participation aux acquêts: assets stay separate during the marriage, and each spouse shares in half of the other’s net gains on dissolution) divorce by a ruling of 11 May 1999; difficulties arise during the liquidation and partition of their regime. During the marriage, the husband alone financed a jointly owned flat in Paris intended for letting; he sees it as a revocable indirect gift (donation indirecte).
On 29 September 2015, the Bordeaux Court of Appeal holds that this financing amounted to “not a revocable indirect gift, but a remunerative and compensatory act” for the wife. It notes a marriage contract clause creating a rebuttable presumption that the spouses contributed to the expenses of the marriage, the husband’s wish that his wife should not work and the intention to compensate for her position as a stay-at-home mother. Above all, it holds that the expenses of the marriage also include “the organisation of savings enabling the spouses to continue their existence after the cessation of their capacity for paid activity”, and that “the purchase of real property other than the family home, intended to secure those aims, may in particular fall within that notion”. The husband appeals.
The decision
The First Civil Chamber quashes (Cass. 1re civ., 5 October 2016, appeal no. 15-25.944, reported in the Bulletin).
Under article 16 of the Code of Civil Procedure, it first criticises the Court of Appeal for ruling “by raising of its own motion the ground based on the spouses’ contribution to the expenses of the marriage, which the parties had not relied on, without first inviting them to submit their observations”.
Under article 214 of the French Civil Code, which governs the spouses’ contribution to the expenses of the marriage, it then holds that the Court of Appeal breached that provision, “whereas the financing, by a spouse, of a rental investment intended to build up savings, does not fall within the contribution to the expenses of the marriage”.
The Court of Appeal’s ruling is quashed insofar as it characterises the financing as a remunerative and compensatory act. It is also quashed on another point, the limitation period for the action to settle the joint ownership’s accounts, which is not discussed here. The case is remitted to the Toulouse Court of Appeal. The Court rules out one characterisation without imposing another: it does not say that the financing is a gift.
What this changes for valuation
What falls within the expenses of the marriage is not accounted for. A payment made in performance of the contribution to the expenses of the marriage gives rise, in principle, to no account between the spouses: the spouse who made it paid what was owed. By refusing that treatment to the rental flat, the decision reopens the question: the wife’s share, paid for by the husband, must be given another characterisation, and that characterisation drives the figures.
The use of the property is documented. The rule concerns a rental investment intended to build up savings. The report therefore describes the actual use of the property since its acquisition: leases, rents received, vacancy, no occupation by the family. These findings do not characterise the financing, which is for the judge, but they help the judge tell a rental investment from the family home.
The report quantifies each hypothesis. Failing donative intent (intention libérale), that is, an intention to give, the spouse who financed the other’s share may assert a claim. For claims between spouses under separation of property (séparation de biens), the regime under which participation in acquisitions operates during the marriage, the Court applies the subsisting profit rule (profit subsistant), as the decision on the claim for funding an equalising payment shows: the claim cannot be less than the fraction of the property funded by that spouse, applied to the property’s value on the day of liquidation. The report therefore gathers the acquisition cost, with price and costs shown separately, the share paid by each spouse and the value of the flat as close as possible to liquidation, in its condition on the day of acquisition. The question of costs is dealt with, for compensation between spouses (récompense) under the community regime, in the article on costs included in the subsisting profit.
The valuations specific to participation in acquisitions. The liquidation also compares each spouse’s original estate (patrimoine originaire) and final estate (patrimoine final); each spouse’s undivided share in the flat appears in their final estate. Assets existing at dissolution are valued there according to their condition at that date and at their value on the day of liquidation, as the decision on added value from work recalls. A let flat is valued as let: the report states the lease and supports with references the gap between let and vacant possession value.
The family home, a neighbouring line. From 2019 to 2022, the Court held that a capital contribution of personal funds by which a spouse under separation of property finances the other’s share of the jointly owned family home does not fall within the contribution to the expenses either, unless the spouses agreed otherwise, and opens a claim: see the capital contribution to the jointly owned home. These more recent decisions do not contradict the 2016 one: they apply to the family home, for capital contributions, an exclusion comparable to the one applied to rental savings. Loan repayments on that home may, by contrast, fall within the contribution.
What the valuer takes from it
- The financing by a spouse of a rental investment intended to build up savings does not fall within the contribution to the expenses of the marriage (article 214 of the Civil Code).
- The decision rules out the contribution to expenses without characterising the financing; the remittal court will rule, and the report quantifies each hypothesis (gift, claim).
- The report documents the letting use of the property, leases, rents, vacancy, so that the judge can distinguish it from the family home.
- The value of the flat is set as close as possible to liquidation, in the condition each computation requires, taking account of the current lease.
- For the family home, the 2019 to 2022 decisions also exclude capital contributions, unless the spouses agreed otherwise.
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 indivision, date de valeur and décote pour occupation complement this article. The two other 2016 decisions on accounts between spouses are discussed in Matrimonial compensation: no extra award for acquisition costs and Matrimonial compensation: separate funds proved by any means. On the same theme: Separation of property: paying for the home creates a claim and Participation in acquisitions: added value from work counts. The decision is available on Légifrance.
What next
A rental flat financed by one spouse, and its characterisation disputed on liquidation?
I establish the acquisition cost, the share paid by each spouse and the value of the flat as close as possible to liquidation, let or vacant. The report sets out the amounts under each characterisation, for the notaire handling the liquidation or the court.
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