When does real estate fall within the community property?
Are you planning to buy a freehold property? Are you also married and do not have a matrimonial property regime (or otherwise “SJM”) different from the law? Can such a deal even be done?
It is not impossible to acquire a property in sole ownership during the marriage, but the whole process will need to be legally secured to ensure a safe purchase.
If you have no matrimonial property regime, you are deemed to have created a community of property at the time of marriage, which generally includes all property acquired during the marriage by either spouse, except in particular gifts, inheritances or property acquired from the sole resources of one of the spouses.
Therefore, if you buy a property during the marriage, the property automatically becomes part of the community property. Debts related to the purchase of the property (typically a mortgage loan) also automatically become part of the community property.
How to buy a freehold property?
However, there are situations where one of the spouses may have an interest in acquiring sole ownership of the property. This may be the case, for example, where the spouse has a right to the property. one spouse inherits funds or receives them as a gift and wants to invest them in real estate.
Therefore, if you are interested in transferring the ownership of the property to only one spouse, a declaration from the other spouse must be drawn up in which the other spouse declares that he/she agrees to the purchase of the property and confirms that the property was financed from the first spouse’s exclusive funds (inheritance, gift) and that these funds are not part of the community property. Neither the signature of the contract of sale by only one spouse nor the registration in the Land Registry against one spouse generally means that the property is not part of the matrimonial property.
Property can also be acquired in sole ownership if the community of property between the spouses is reduced. The matrimonial property may be reduced by notarial deed, both in relation to assets already in the matrimonial property and to assets acquired in the future. This does not extinguish the community property, but certain things can be excluded from it. The community property can also be separated by notarial deed. This will result in the settlement of all existing assets and the division of all assets in the matrimonial property between the spouses.
Why is it important to set up contracts correctly?
Arranging the matrimonial property regime or acquiring ownership of real estate can have several advantages – for example, it can protect the property from debts or business activities of one of the spouses, or it can serve as protection in the event of a future divorce.
Contract documentation must therefore be prepared carefully, as incorrectly set up contracts can cause complications. If you are interested, we can help you prepare the relevant documents.
If you would like more information in this regard, please do not hesitate to contact us.
This article is for informational purposes only and does not constitute legal advice or guidance for any particular case.