Divorce in the Czech Republic and sale of the matrimonial home. During a marriage, spouses often purchase all the assets together, including real estate, and it then becomes common property of the spouses, unless the spouses have agreed otherwise, such as in the form of a deed, to a different regime of ownership (e.g. prenuptial agreement); or if the assets were bought from the monies earned by any of the spouses prior to the marriage or the assets were part of a donation or an inheritance to any of the spouses individually.
In the event of a divorce, the common property has to be divided. In the following article, we briefly describe the legal provisions concerning the division of matrimonial assets with particular focus on real estate located in the Czech Republic.
Division of the common property of spouses in the Czech Republic - Legal framework
According to the Czech legislation, in particular the Civil Code, there are three options how the common property of the spouses can be divided. The common property shall be divided (i) as a part of the divorce proceedings on the basis of a written agreement on the division of the common property, confirmed by the respective court, OR (ii) after the divorce on the grounds of a separate written agreement of the spouses, OR (iii) as a part of separate court proceedings initiated by either of the spouses during the first three years of when their divorce becomes valid, provided that the common property was not divided under the divorce proceedings. If the common assets cannot be divided pursuant to the provisions (i) to (iii) above, then the indisputable legal assumption of joint ownership (found in the Civil Code) applies to the real estate, previously forming the common property of the spouses, irrespective of claims otherwise.
The division of the common property on the basis of an agreement
During the divorce proceedings, the spouses may conclude an agreement on the division of any common assets including the division of the real estate. Such agreement can be presented to and can be approved by the court in amicable divorce proceedings. If an amicable divorce cannot be reached, the court shall rule on the divorce of the spouses itself and shall leave the division of the common assets to be dealt with by the ex-spouses separately.
In any case the agreement on the division of real estate has to be in writing with verified signatures of both spouses. Such agreement shall determine in detail who shall be the owner of the respective assets forming part of the former common ownership. The spouses are not limited in any way with respect to the division of ownership; i.e. it may be agreed that one of the spouses shall become the sole owner of all the real estate which formed the common property of the spouses whilst the other spouse shall have the right to use it, under mutually agreed terms. Also, in times when the real estate market is growing, the spouses may agree to sell the real estate and to divide the proceeds of sale. Despite the fact that the spouses are free to decide on how the real estate is divided, in any agreed manner, their agreement must respect the rights of any third parties (e.g. individual creditors, mortgage banks); in the case that any rights of such third parties are infringed, such third party is entitled to file a claim to the respective court to hold that the agreement is invalid.
The division of the common property on the basis of a court´s decision
Should the spouses fail to reach a mutual agreement on the division of their common assets, then either of the former spouses is entitled to file a court action seeking the division of the common assets on the basis of that court's decision. When considering the matter, the court shall only be deciding on the common property specified in the plaintiff's application, whilst the manner of the property division is up to the court´s discretion. Nevertheless, the aim of the court is to rationally divide the common real estate using an approach similar to that adopted when dividing common assets. As to dividing the real estate, the court may decide in any of the following ways.
The real estate may be (i) allocated to one of the former spouses or (ii) allocated into a co-ownership of the real estate by the former spouses. The court may also order the real estate to be sold at a public auction, with the shares on the proceeds being allocated to each of the former spouses. The court may also divide the real estate into residential units and/or grant an easement or other form of non-financial servitude to one or both of the former spouses.
The value of the real estate property and shares allocated to each of the former spouses will be determined on the day of the court´s decision. When the property is to be divided by a decision of the court, inequality of spousal shares is very rare. However, when pursuing equity in the matter the court may rule on the disparity of the shares (e.g. in cases when one of the spouses made repairs or made improvement to the real estate from his/her own funds rather than using funds belonging to the common property). In this case, such "active" former spouse shall therefore be awarded a bigger share.
The division of the common property on the basis of the legal assumption
In the event that during the first three years after the divorce the spouses are neither able to agree on division of the common property, nor file an action to the court to decide on such division, an irrefutable legal assumption of joint ownership applies. Under this legal assumption, the former spouses become joint-owners of the real estate which was forming their common property. Each of the former spouses owns one half of such real estate.
To conclude, the division of real estate is mostly based upon mutual agreement between the spouses which is strongly recommended since the costs of initiating proceedings is very costly and in most cases ineffective.
For more information, please contact:
JUDr. Mojmír Ježek, Ph.D.
Managing partner
ECOVIS ježek, advokátní kancelář s.r.o.
Betlémské nám. 6
110 00 Prague 1
e-mail: mojmir.jezek@ecovislegal.cz
www.ecovislegal.cz/en
About ECOVIS ježek advokátní kancelář s.r.o.
The Czech law office in Prague ECOVIS ježek practices mainly in the area of Czech commercial law, Czech real estate law, representation at Czech courts, administrative bodies and arbitration courts, as well as Czech finance and banking law, and provides full-fledged advice in all areas, making it a suitable alternative for clients of international law offices. The international dimension of the Czech legal services provided is ensured through past experience and through co-operation with leading legal offices in most European countries, the US, and other jurisdictions. The Czech lawyers of the ECOVIS ježek team have many years of experience from leading international law offices and tax companies, in providing legal advice to multinational corporations, large Czech companies, but also to medium-sized companies and individual clients. For more information, go to www.ecovislegal.cz/en.
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