The variety of life situations is amazing. If it were necessary to write down the norms of the law for each specific case of life, then not only ordinary citizens, but also professional lawyers would be lost in the available Talmuds. Currently, the law provides general rules of the game, and the specific situation is considered from the point of view of the article to which it can be attributed and the established judicial practice on this issue.
Lawyers of the “Repeshko and Partners” Bar Association commented on the atypical situations in which spouses find themselves during the distribution of jointly acquired property during marriage.
Taking into account the modern reality, a fairly typical situation is encountered in our practice – a husband or wife has their own premarital real estate (a house or an apartment). During the marriage, the spouses live in this house, repair, remodel, demolish something, build something, etc. And if in the case of an apartment there is no place to walk around (although it is also quite possible), then in the case of a private house and outbuildings, the only limitation can be a fence along the plot of land. Now, instead of a two-room house, there is a two-story mansion on the plot, and the division of the property of the spouses is on the agenda of the divorce. What to do in such situations?
According to the general rule defined by Article 60 of the Family Code of Ukraine, the property acquired by the spouses during the marriage belongs to the wife and husband under the right of joint co-ownership, regardless of the fact that one of them did not have due to a valid reason (education, housekeeping, care for children, illness, etc.) independent earnings (income).
According to Article 57 of the Family Code of Ukraine: the personal private property of a spouse is:
1) property acquired by her before marriage;
2) property acquired by her or him during the marriage, but on the basis of a gift contract or in the order of inheritance;
3) property acquired by her during the marriage, but with funds that belonged to her, to him personally;
4) housing acquired by her during the marriage as a result of its privatization in accordance with of the Law of Ukraine “On Privatization of the State Housing Fund”;
5) the land plot acquired by her during the marriage as a result of privatization of the land plot.
At the same time, the next norm of the law is, so to speak, a hybrid of the two previous ones. It defines: if the property of the wife or husband has significantly increased in value during the marriage as a result of joint labor or monetary expenses or the expenses of the second spouse, in the event of a dispute, it may be recognized by a court decision as the object of the right of joint joint property of the spouses. From the content of this rule, it can be seen that interference with the right to ownership can be justified in the case of the presence of a combination of two factors: the substantial increase in the value of the property, as well as if such an increase in value is associated with joint labor or monetary costs or the costs of the second spouse, who is not the owner.
In this case, the “significance of the increase in the value of the property” is an evaluative concept, therefore, in a specific court case, the decision to satisfy or refuse to satisfy the claim is made by the court taking into account all the specific circumstances inherent in the given situation. But the first thing you need to pay attention to is the essentiality. At the same time, it will be taken into account not only the increase of the final value in comparison with the initial value of the real estate, but also the relationship with the general trends of the increase in the price of the specific property, inflationary processes, but also the fact that the initial value or the object itself becomes insignificant.
How it can work on specific examples
Example 1: living in an apartment that the wife bought before marriage, the couple made a small redevelopment (a couple of walls were demolished, one was erected), re-glued the wallpaper, installed a custom-made kitchen set, replaced the entrance door, while the total area of the apartment was not housing has essentially not changed. In addition, during this time, a subway station was dug almost under the building, a park area was arranged nearby, a supermarket was built, and therefore the real estate in this area increased by 20 percent in value just for these reasons. During the divorce, the husband stated that since the beginning of the married life, the wife’s apartment was worth the equivalent of about 40,000 US dollars, and currently its value is the equivalent of 65,000 US dollars, so it must be divided! We can say that in this case there will be no distribution, because the characteristics of the apartment in terms of living space and total area have not changed, and the significant increase in value is related to the general increase in prices in this area of the city.
Example 2: a man received a small house in a suburban area as an inheritance from his grandmother. Nothing special: one-story, three rooms, gas in the house, toilet and water on the street, total area 75 sq.m., residential area – 42 sq.m. At first, the couple used the house as a country house, but in the future, the good location in relation to the city and public transport led to the idea of rebuilding the inherited house, turning the country house into a full-fledged residential one. This is how a two-story house with five rooms appeared, with a toilet and a bathroom in the house, with a garage for two cars, a gazebo in which you can also take a walk at the wedding of children, a sauna and much more. By the way, the total area of the house is already 150 square meters, and the living area is 85 square meters. During the divorce, the wife declared that half of the house belonged to her, and in this case she would be completely right.
How will a significant increase in property be determined in practice
In the examples given, it is immediately visible, but in life sometimes not everything is so simple. Therefore, it will be necessary to take into account:
- How significantly the value of the property has increased from the initial before and after the improvements due to joint labor or monetary expenses or the expenses of the other spouse.
- The materiality must be such that, as a result, the primary real estate object, which belonged to one of the spouses by right of private value, dissolves, is leveled, is lost, or becomes so insignificant, insignificant in comparison with the object of immovable property that appeared under during the marriage as a result of the joint labor or financial expenses of the spouses, or the other spouse who is not the owner.
This is explicitly stated in the decision of the Supreme Court dated January 27, 2021 in case No. 332/4629/15.
As evidenced by a wealth of judicial practice, courts often refuse to recognize the right of the other spouse to jointly own the apartment in the example we gave, even if evidence of expensive repairs was provided. The key word in this case is “may”, which is spelled out in Article 62 of the Civil Code of Ukraine, which means that the recognition of such an apartment as joint property is the right of the court, and not its duty, even if the claimant’s claims are justified.
A vivid example of this situation is case No. 308/4961/21 (the final decision on which was adopted by the Supreme Court of Ukraine – resolution dated June 25, 2024), where the ex-wife referred to the fact that the disputed apartment was remodeled and completed with joint funds, which significantly increased its cost and area.
In support of the claims, the plaintiff provided, in particular:
- property valuation report after repair;
- photographs showing the plaintiff during the reconstruction, an expense invoice for the purchase of air conditioners, orders for roofing materials, commodity and fiscal receipts, settlement receipts, invoices, bills of lading, buyer’s orders, which confirm that she incurred expenses for construction work;
- interrogated, witnesses – foreman for the execution of individual construction works; an employee and a specialist who was engaged in the installation of an air conditioning system.
However, the courts of all three instances refused the plaintiff to satisfy the claims and to recognize the apartment as joint joint property, since the reconstruction of the disputed apartment was carried out even while the parties were married, but the plaintiff did not provide evidence that the property belonging to the defendant by the right of personal ownership is substantial increased in value as a result of joint labor or monetary costs.
Moreover, taking into account the previous clarifications of the Supreme Court of Ukraine, the primary real estate object – an apartment that belonged to one of the spouses on the right of private value (the husband) did not dissolve, is not leveled, was not lost or did not become so insignificant, insignificant in comparison with that object of immovable property that appeared during the marriage as a result of joint labor or financial expenses. In fact, according to the plot of the case, we have the same apartment, but with better renovation.
Usually, in such cases, we recommend going to court with a demand for compensation of half of the repair cost. Yes, compensation for half the cost of repair work is not the same as half the apartment, but it is much better than nothing at all. In order to file a claim for compensation, it is not necessary to prove the same “significance of changes”, but only the fact of repair work and the amount of invested funds need to be proved.
In general, judicial practice follows the path that the current repair of housing, changing its purpose from residential to non-residential without capital conversion will not provide grounds for defining such an object as joint joint property of the spouses, since the object itself has not undergone significant transformations and cannot to consider these transformations as having significantly increased the value of the property.
Also, the mere fact of persons being married during the period when the personal property of one of the spouses or its value has significantly increased is not a reason for recognizing it as joint property. Thus, an example of an increase in the value of a man’s personal house with his personal funds can be the case when the funds he received from the sale of an inherited apartment were used to rebuild his own house. At the same time, it is necessary to carefully study and compare all the dates when the apartment was inherited, when it was sold, how much it was sold for, when the repair work in the house began, how long it lasted, what amount was invested in the repair work, in what sizes, etc.
In general, a very effective advice for all cases of harvesting is to collect documents. Checks, invoices, expense invoices, receipts, contracts, etc. – all this must be carefully compiled and stored, because no one ever knows when all of this will be needed and for what reason. Regarding checks, we would like to note that their life span is quite short – after a year, the printed inscription begins to fade, so we advise you to immediately make photocopies of the checks to ensure that the information is preserved.
Litigation is always adversarial, so whoever provides the most convincing evidence to support their position wins. And what can be more convincing than written documents?!
It should be noted that legal disputes in the above situations will be considered by the courts at the location of such immovable property, regardless of the place of registration of the parties.
The court fee for this category of cases is 1% of the amount of the claim, but for 2024 it is not less than UAH 1,211.20 and not more than UAH 15,140.00.
In order to find out whether the same “significant increase in property” has taken place, in many cases it will be necessary to ask the court to appoint a forensic construction-technical and commodity expert examination so that the relevant forensic expert institution gives a conclusion regarding the specific situation under the conditions of the specific case. The cost of such examinations is quite high and can amount to several tens of thousands of hryvnias, depending on the scope of work (the size of the real estate and its location, as well as the number of questions that will be put to the expert for resolution). However, remember that the best way to win an argument is to avoid it!
