Who Owns the Apartment if It Was Bought on the Day of Selling Personal Property: The Supreme Court Prepares a New Approach

The Supreme Court referred to the United Chamber of the Cassation Civil Court a case concerning the division of an apartment between former spouses due to different approaches in judicial practice regarding the legal regime of property acquired during marriage with funds from the sale of personal property of one of the spouses.

The panel of judges concluded that different approaches have formed in the Supreme Court's practice for resolving such disputes, so it is necessary to develop a unified legal position. The final conclusion in this case is to be made by the United Chamber of the Cassation Civil Court.

Circumstances of the Case

In December 2021, a man filed a lawsuit to divide a three-room apartment in Kyiv, acquired during the marriage. The plaintiff requested recognition of his ownership right to half of the apartment, considering it joint marital property.

The Podilskyi District Court of Kyiv satisfied the claim. The Kyiv Court of Appeal left this decision unchanged. The courts reasoned that the apartment was acquired during the marriage, and the case materials did not contain proper and admissible evidence that the funds for its purchase were the personal property of the wife. As a result, each former spouse was recognized as owning half of the apartment.

In the cassation appeal, the defendant insisted that the apartment was purchased exclusively with her personal funds. She stated that on September 29, 2003, she sold an apartment share owned by her and on the same day bought the disputed property. In her opinion, the apartment was acquired before the Family Code of Ukraine came into force, so the dispute should be resolved according to the Marriage and Family Code of Ukraine. The defendant also noted that the proceeds from the sale of her share significantly exceeded the cost of the purchased property, thus rebutting the presumption of joint marital property.

The Problem in Judicial Practice

When considering the cassation appeal, the Supreme Court noted that its practice contains different approaches to determining the legal regime of property acquired during marriage after the sale of personal property of one spouse.

In some decisions, the Supreme Court held that selling personal property and purchasing another object on the same day may indicate the use of personal funds and, accordingly, the emergence of the right of personal private ownership. In other cases, the court stated that the mere sequence of contracts concluded on the same day is not sufficient evidence of using those funds to acquire new property and does not rebut the presumption of joint marital ownership.

There is also an approach in practice where the consent of the other spouse to acquire property with joint funds is significant. In such cases, the property may be recognized as joint marital property regardless of the fact that personal property of one spouse was alienated the day before or on the same day.

Position of the Supreme Court

The panel of judges of the Second Judicial Chamber of the Cassation Civil Court noted that the existence of different approaches creates legal uncertainty and requires the formation of a unified approach. The court referred to the practice of the European Court of Human Rights, according to which contradictory practice of the highest judicial instances may undermine the principle of legal certainty and trust in the judicial system.

The panel also indicated the need to depart from some previous conclusions of the Supreme Court and proposed a new approach for consideration by the United Chamber. In particular, the court expressed the position that the alienation of personal property by one spouse and the acquisition of another real estate object on the same day may indicate the use of personal funds and confirm the emergence of the right of personal private ownership in the absence of the other spouse's consent to acquire such property with joint funds. At the same time, the presence of such consent may indicate the emergence of joint marital ownership rights.

What the Supreme Court Decided

The panel of judges did not resolve the dispute on the merits and did not make a final decision regarding the legal regime of the disputed apartment.

The Supreme Court referred case No. 758/17900/21 to the United Chamber of the Cassation Civil Court within the Supreme Court to develop a unified approach to resolving similar disputes. It is the United Chamber that should determine under what conditions the sale of personal property and the acquisition of a new object on the same day may indicate the emergence of the right of personal private ownership, and when such property should be considered joint marital property.

Subscribe to our Telegram channel t.me/sudua and to Google News SUD.UA, as well as to our VIBER and WhatsApp, pages on Facebook and Instagram to stay informed about the most important events.