Who Will Get the Apartment, House, and Business After Divorce: Overview of Five New Positions of the Supreme Court

Division of property after the dissolution of marriage remains one of the most common categories of family disputes. The Supreme Court in its practice has repeatedly clarified when property is considered the personal property of one spouse, under what conditions it can be recognized as joint property, and when the court may depart from the principle of equal shares.

The "Judicial and Legal Newspaper" analyzed five illustrative legal positions of the Supreme Court that help to understand how the most complex disputes regarding property division are resolved today.

1. The mere fact of selling a personal apartment is not enough

The Supreme Court noted: not every reference to the sale of personal property automatically proves that the new property is also personal property.

In case No. 209/3761/20, the wife claimed that she purchased a four-room apartment with money received from the sale of her own one-room apartment. However, the court refused to recognize the apartment as her personal property. The reason is simple – the woman failed to confirm the direct connection between the received funds and the purchase of the new housing.

The court emphasized that it is necessary to prove not only the fact of selling personal real estate but also that these funds were used specifically to purchase a particular object, and not spent on family needs or other purposes. Bank statements, documents on the movement of funds, or other confirmations of the financial transaction can be used as evidence.

In this case, the plaintiff did not provide evidence that the money from the sale of the one-room apartment was not used for the family’s current needs (at that time the couple already had two children). She also did not document income from renting out the apartment, which she allegedly accumulated for the purchase of new housing.

2. A house completed during the marriage does not always become joint property

Another common dispute arises regarding real estate that one spouse received as a gift before the marriage. The Supreme Court considered case 1303/1459/12, where the wife received a land plot and an unfinished house with 64% readiness as a gift before registering the marriage. After the wedding, the house was completed, commissioned, and ownership rights were registered.

The husband insisted that the property became joint ownership, and during their life together the house was finished, gasified, and the interior was arranged exclusively thanks to his significant funds and labor. According to the court expert’s conclusion, the value of the object increased by 94% from the initial cost of the shell during the marriage period. The plaintiff requested recognition of his right to a 1/2 share of the house, land plot, and joint car.

However, the Supreme Court stated: completion of construction itself does not change the legal regime of the property. Recognition of such property as joint ownership is possible only if there is a significant increase in its value due to joint labor or financial contributions of the spouses, which is determined by comparing the value of the property before and after improvements without considering inflation or general price increases. If the significance of such an increase is not proven, the other spouse is entitled only to compensation for expenses incurred.

Current repairs, gasification, installation of a boiler, or interior finishing do not always indicate such significant changes that personal property turns into joint property.

If one spouse indeed invested significant funds or labor, he may claim not a share in the house, but compensation for the expenses incurred.

3. Entrepreneurial kiosks of a sole proprietor can also be joint property

The Supreme Court also clarified that the entrepreneurial activity of one spouse does not automatically mean that all the sole proprietor’s property is his personal property. In case No. 629/3710/20, the husband filed a lawsuit to divide the joint property of the spouses, which included a Toyota Corolla car, an apartment, a residential house, and 9 temporary trading structures (kiosks). The wife claimed they were purchased with funds from her entrepreneurial activity and money gifted by her father. The plaintiff demanded division of the kiosks or compensation for them, taking into account their market value.

However, the court concluded that the woman did not prove the exclusive use of personal funds. Therefore, the kiosks were recognized as joint ownership of the spouses.

At the same time, the Supreme Court agreed that the actual division of such property could effectively destroy the ongoing business. That is why the trading structures were left to the wife, who used them in entrepreneurial activity, and the husband was awarded monetary compensation for half of their market value.

Separately, the Supreme Court emphasized another important point: compensation is determined based on the current market value of the property at the time of the case consideration, not on an appraisal made several years earlier.

4. Who must prove that property acquired during marriage is not joint property

The Supreme Court reminded: all property acquired during marriage is generally considered joint ownership of the spouses. If one spouse claims that a particular item was purchased exclusively with his personal funds, he must prove it.

In case No. 641/2211/23, the husband demanded division of an apartment registered to the wife, as he believed it was purchased with joint family funds borrowed from relatives. The wife insisted that the apartment was her personal property, as it was bought with her own savings and financial help from her parents.

However, the courts found that the wife did not provide documentary evidence of the origin of personal funds. References only to the parties' explanations and witness testimonies were insufficient to refute the presumption of joint ownership.

The Supreme Court upheld the decisions of lower courts and emphasized: the mere fact of registering the apartment to one spouse does not determine its legal status. If there is no proper evidence that the property was purchased exclusively with personal funds of one spouse, it is considered joint ownership and subject to division in equal shares. The burden of proof in such cases lies with the spouse who disputes the recognition of the property as joint ownership.

Thus, the Supreme Court once again confirmed: the presumption of joint property remains valid until the party disputing it provides convincing written evidence supporting their claims.

5. If joint funds were contributed to the authorized capital of an LLC: what the other spouse can claim

The Supreme Court drew attention to another common dispute during property division – what happens if one spouse invested joint family funds into the authorized capital of a limited liability company.

In case No. 369/5830/22, the husband requested division of a car that the wife sold without his consent. In response, the wife filed a counterclaim demanding, among other things, compensation for a share in the LLC, of which the husband was a founder. The authorized capital of the company was 500,000 UAH and was formed during the marriage from joint family funds.

The courts of first and appellate instances agreed that the wife is entitled to compensation of 250,000 UAH, but the Supreme Court clarified an important legal approach. The court explained that after funds are contributed to the authorized capital, they cease to belong to the spouses and become the property of the company itself. Therefore, the other spouse cannot demand the return of half of the contributed funds as such. Instead, he has the right to claim compensation for the value of the participant’s share in the company that belongs to the other spouse.

The Supreme Court also noted that the market value of the share at the time of the court claim must be assessed. At the same time, if neither party proves that this value has changed, a presumption applies: the share is considered equal to the amount of the initial contribution.

Since the husband did not provide evidence that the share in the company increased or decreased in value compared to the initial 500,000 UAH, the Supreme Court left the compensation amount unchanged – 250,000 UAH, although it noted that the lower courts incorrectly justified the legal nature of this claim.

Legal conclusion: property or funds contributed by one spouse to the authorized capital of an LLC become the property of the company itself, and the other spouse has the right to claim payment of half the value of the participant’s share in the authorized capital, not half of the contributed funds. In the absence of evidence of a change in the value of the share, the court applies the presumption that its value corresponds to the amount of the contribution.

Analysis of the Supreme Court’s practice shows that decisive importance in disputes over property division lies not in the parties' assumptions but in proper evidence. In particular, parties should be prepared to confirm: the source of funds used to purchase property, the actual movement of these funds and their use specifically for buying a particular object, the amount of personal or joint investments in the completion or reconstruction of real estate, facts of one parent evading child support, and the current market value of the property at the time of dispute consideration.

That is why the outcome of such disputes largely depends on the quality of the evidentiary base, not just the parties' positions.

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