Dissolution of the joint ownership of the spouses during marriage

The joint ownership of the spouses is regulated in the Civil Code in Article 143, according to which everything acquired by either spouse during the marriage is jointly owned. This includes both assets and liabilities of the spouses. If the spouses have assets in the joint property regime, these assets may be used to satisfy debts caused by one spouse only.

As one of the institutes for the protection of the assets of one of the spouses in the joint ownership of the spouses is the dissolution of in the joint ownership. It should be noted, however, that the effects of the dissolution of the joint ownership of the spouses only take effect from the date of the court’s final decision on the dissolution for the future.

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Is an agreement enough or is a court application necessary?

Spouses cannot agree to dissolve and settle the joint ownership of the spouses themselves during the marriage, but the court must do so on the application of one of them: “The joint owners cannot agree on the dissolution and settlement of the joint ownership of the matrimonial property. During the marriage, only the court may dissolve the joint ownership.” (Judgment of the Supreme Court of the Slovak Republic, Case No. 5Cz 51/73)

For which reasons is it possible to dissolve the joint ownership of the spouses during the marriage?

In order to dissolve the the joint ownership of the spouses during the marriage, at least one of the statutory reasons must be met:

  • The court shall, on application, dissolve the joint ownership of the spouses if one of the spouses has acquired a business licence. The spouse who has not obtained a business licence may file the application. If both spouses have such authorisation, the application may be lodged by either of them.
  • For serious reasons, in particular if the continuation of the community of property would be contrary to good morals, the court may, on the application of one of the spouses, dissolve the community of property even during the marriage.

You can read more about the grounds for dissolving the joint ownership of the spouses during marriage in our post here: Reasons for dissolving the joint ownership of the spouses during marriage

Application for dissolution of the the joint ownership of the spouses on grounds of breach of good morals

The joint ownership of the spouses is usually dissolved together with the dissolution of the marriage, but in statutory cases it can be dissolved during the marriage. One of the spouses may apply to the court, on application, for the dissolution of the the joint ownership of the spouses for serious reasons, in particular if the continuation of the the joint ownership of the spouses would be contrary to good morals. If the court grants such an application, the the joint ownership of the spouses is dissolved. It is up to the court to define what good morals are and when there is a conflict of morals, which may rely on existing case law or legal doctrine. In the context of the dissolution of the the joint ownership of the spouses, good morals may be violated, for example, when one spouse endangers another’s property, or when the spouse’s serious behaviour manifests itself in wasteful use of the common property to the detriment of the family – i.e. concealment of high debts, etc. For the court to annul the the joint ownership of the spouses on application, it is not enough for the spouses to argue identically, it is necessary to prove the existence of compelling reasons. The dissolution of the the joint ownership of the spouses takes place on the date of the final dissolution decision.

According to legal literature, serioous reasons include, for example, “‘Serious reasons’, which are a condition for granting a petition for the dissolution of the joint ownership of the spouses, cannot be precisely determined in advance. It will be a matter for the court’s specific findings as to the parties’ marital circumstances, their relationship with each other and the conduct of the defendant spouse who is bringing the application as to whether the conditions for a favourable decision are met. Serious grounds for the dissolution of the joint ownership of the spouses may be considered to be the wasteful behaviour of one of the spouses, damage to the economic interests of the family, the prolonged breakdown of the joint household, etc. As a rule, the dissolution of the joint ownership of the spouses is based on serious conduct on the part of the spouse which manifests itself in the wasteful use of the common property to the detriment of the family, in particular the minor children, or in the fact that the spouse does not participate at all in the creation of the common property, avoids work, does not live permanently with the family and does not provide for the family’s needs. In such a case, the court will normally find that the institution of joint ownership of the spouses does not fulfil its purpose in the particular case, that its continuation would be contrary to good morals and that one of the spouses would be substantially harmed by it.” (Fekete, I.: Civil Code. Commentary)

The Trnava Regional Court also commented on the reason that the spouses do not live together in the same household in its decision, Case No. 11CoP/220/2017:

“I. The purpose of Article 148(2) CC is to create conditions to ensure the protection of one of the spouses in a situation where the institution of the joint ownership of the spouses, which expresses their equal status in the sphere of property, has ceased to fulfil its function for serious reasons. Serious reasons enabling the court to grant an application for the dissolution of the community of property within the meaning of the above provision may be regarded as such as the conduct of one of the spouses which manifests itself in the wasteful use of the common property to the detriment of the family, or where one of the spouses does not contribute to the creation of the common property, the destruction of the common property, the lack of interest of one of the spouses in the family, and the like.

II. The evidence taken shows that the parties to the dispute are married, at the time undergoing divorce proceedings and have not been cohabiting since 2016, which the applicant considers to be a ground for upholding his action, but, as the first-instance court correctly stated, the dissolution of the cohabitation does not result in the dissolution of the spouses’ joint ownership. Nor is the divorce proceedings under way a compelling reason for the dissolution of the joint ownership of the spouses. If the appellant argues that he and the defendant have effectively ceased to live together, that is not sufficient to conclude that there are grounds for the dissolution of their joint ownership, but it is necessary to examine, first, whether that is a permanent state of affairs with no hope of resumption of cohabitation and, second, whether, as a result of the separation, the spouses do not both share in the creation of the common property, which cannot be said to be the case in the present case, since, although they are separated, both spouses do share in the creation of the joint property.

III. The defendant takes proper care of the spouses’ common children, does not waste the common property to the disadvantage of the family, works properly and thus continues to contribute to the creation of the common property even after the end of the cohabitation, and therefore the Court of Appeal did not see any reason for the dissolution of the joint ownership of the spouses.”

Dissolution of the joint ownership of the spouses on account of business activities

If one or both spouses obtain a permit to do business, the court will dissolve the joint ownership of the spouses on the petition of the spouse who is not doing business (if both are doing business, on the petition of one of them). A business is a continuous activity carried out by an entrepreneur on his/her own account and on his/her own responsibility for the purpose of making a profit. An entrepreneur is a person as defined in Section 2 of the Commercial Code:

  • a person registered in the commercial register
  • a person who carries on business on the basis of a trade licence
  • a person who carries on business on the basis of a licence other than a trade licence pursuant to special regulations
  • a natural person who carries out agricultural production and is entered in the register under a special regulation

In the proceedings, the court determines only two things: 1) whether the petition was filed by the person entitled (the other spouse) and 2) whether one of the spouses is carrying on a business. If this is the case, the joint ownership of the of the spouses must be dissolved.

Court fee for an action for the dissolution of the joint ownership of the spouses during the marriage

The court fee for an action under the Court Fees Act is EUR 165.50.

Satisfaction of the claims of one of the spouses on the assets of the community property

According to Section 147 of the Civil Code, if the following conditions are met, the spouse must agree to satisfy the claims of the other spouse’s creditor:

  • the property belongs to the joint ownership of the spouses at the time of enforcement
  • the claim arose during the marriage

Donation of property for the purpose of protection from creditors

Donation to a close person. Under the Civil Code, the conclusion of a gift agreement would be a repudiatory act under Article 42 of the Civil Code, whereby acts done by the debtor in the last 3 years in favour of a person close to him constitute repudiatory acts against which a creditor may bring an action for repudiation in court and the act becomes ineffective.

A close person can be defined as:

  • a person close to the debtor (a relative in the direct line, a sibling, a spouse, a person who would perceive the injury suffered by the debtor as his or her own …)
  • a legal person in which the debtor or a person close to the debtor has an ownership interest of at least 10% at the time when the act occurs
  • a legal person in which the debtor or a person close to the debtor is a statutory body/member of the statutory body/proxy/ liquidator
  • a legal person in which a legal person in which the debtor or a person close to the debtor has an ownership interest of at least 10% has an ownership interest of at least 34%

Similarly, this case could also involve the criminal offence of creditor detriment under section 239 of the Criminal Code, where “whoever, even partially, frustrates the satisfaction of his creditor by …. selling, exchanging or otherwise removing even a part of his property … shall be punished by imprisonment for up to two years.”

Donation to a third party

An opposed act is also an act which the debtor has done without adequate consideration (adequate being determined at least by the amount expressed in an expert opinion or professional estimate) and which has been done with the intention of unreasonably delaying or preventing payment to the creditor. The condition on which a creditor may claim that a transaction fulfilling the abovementioned characteristics is void is that the transaction has been carried out within the last three years. An exception to the rule in the case of a voidable instrument is the ignorance of the person for whose benefit the debtor has performed the voidable instrument. Thus, where a debtor sells real estate to a third party who subsequently sells that real estate to the debtor’s husband, that person cannot be presumed to have been unaware of the causes and consequences of the debtor’s conduct, who, by that conduct, was attempting to act in a manner which would ultimately result in the creditor being defrauded. Therefore, such conduct may constitute an irreconcilable act.

Settlement of joint ownership of the spouses during the marriage

According to case law, it is not enough to dissolve the joint ownership of the spouses, it must also be settled: “to enforce an obligation incurred during the marriage only one of the spouses may be ordered to enforce a judgment also on property belonging to the joint ownership of the spouses which was not settled at the time the enforcement proceedings were initiated. That conclusion undoubtedly also applies to the joint ownership of the spouses.’

After the dissolution of the joint ownership of the spouses, it is is settled in accordance with § 149 and § 150 by agreement between the spouses or by the court at the request of one of the spouses. The agreement on the settlement of the joint ownership of the spouses may be concluded after the court’s judgment on the dissolution of the joint ownership of the spouses has become final. If there is real property in the property regime, the agreement on the division of the property regime must be in writing and shall take effect upon entry in the Land Register.

The possibility of concluding an agreement reflects the contractual freedom of the parties and therefore the parties may also agree on terms of settlement different from the division of the property in the joint ownership of the spouses equally between the spouses. According to the decision 4 Cdo 147/2011 of the Supreme Court of the Slovak Republic, an agreement on the settlement of the joint ownership of the spouses by which one of the parties acquires a substantially smaller share or acquires nothing, as well as an agreement which does not concern the entire property (partial settlement of the joint ownership of the spouses agreement) is valid.

Agreement on the reduction of the joint ownership of the spouses

The agreement on the reduction of the joint ownership of the spouses within the meaning of Section 143a of the Civil Code applies only to assets acquired after the conclusion of the agreement on the reduction. The reduction of the joint ownership of the spouses may be effected in the form of a notarial deed. By means of the narrowing, the spouses determine the items they wish to exclude from the joint ownership of the spouses. The specific feature is that this agreement only applies to items that the spouse will acquire in the future, i.e. items that are not yet part of the joint ownership of the spouses.

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