It is considered that the divorce procedure begins from the moment of applying to the court or the Registry Office. However, the really difficult process of divorce begins with the division of common property. After all, this is usually a more complicated and lengthy procedure than the process of severing the relationship.
Legal regime of property
Article 60 of the Family Code stipulates that property acquired by the spouses during the marriage belongs to the spouses on the right of joint ownership, even though one of them did not have it for a good reason (education, housekeeping, childcare, illness, etc. ) self-employment (income).
It is considered that everything acquired during the marriage, except for things for individual use, is subject to the right of joint ownership of the spouses. However, what to do if the real estate is transferred by one of the spouses under a lease agreement? Is it possible to share the income received from the tenant?
First of all, it is necessary to establish the legal regime of the leased property. That is, whether it was the subject of joint property of the spouses and acquired in marriage or is the personal property of the husband or wife.
If the property is the personal property of the spouse, in particular, was acquired before marriage or received as a gift, inherited or acquired even in marriage, but at personal expense, the income received from the transfer of such property for rent or another disposal, is also the personal property of the spouse to whom the property belongs. Even if the money from the transfer of the leased property belonging to the husband was received by the wife after the termination of the marriage, the latter has the right to recover such funds in court.
This position is contained in the decisions of the Kyiv Court of Appeal of 21.12.201 and 14.12.2020 in case №757 / 34950/14-k, as well as the decision of the Civil Court of Cassation of 19.08.2020. The court held that since the non-residential premises, which were the personal property of the husband, were rented out and received by the wife even after the termination of the marriage, the funds should belong to the husband. That’s why he collected UAH 2,970.16 from the woman in his favor.
If the property is the joint property of the spouses and transferred to third parties by the lease agreement, the income received is joint and must be divided into appropriate shares. When the money from the tenant is received in full by one of the spouses, the other has the right to demand recovery of funds by his share in the ownership of such property.
Significant increase in property
It is another matter when, while married, one of the spouses helped the other with financial, and labor efforts to increase the value of the property that is the personal private property of the other and is now rented out.
From the content of Art.62 of the IC, it is seen that interference with property rights may be justified, and the balance of interests of the spouses is observed in the presence of a combination of two factors:
• the significance of the increase in the value of the property;
• such an increase in value is related to the joint labor or monetary costs or the costs of the other spouse who is not the owner.
As labor costs should be understood as personal or joint work of the spouses. Such activities may be aimed at repairing the property, its completion, or reconstruction, ie actions that have led to a significant increase in the value of such property.
Monetary costs involve the contribution of personal or joint funds to improve or increase property. The presence of a significant increase in value is an evaluative concept, so in a particular case, the decision to satisfy or refuse to satisfy the claim is made by the court taking into account all the circumstances.
However, in the issue of increasing the value of the property, special attention should be paid precisely because it lies in the concept of “increasing the value of the property”.
The Grand Chamber of the Supreme Court in its ruling of 22.09.2020 stated that the significance of the increase in the value of the property should be clarified by comparing the value of the property “before” and “after” improvements due to joint labor or monetary costs or the costs of the other spouse. That is, the significance of the increase in value must be such that the primary real estate object, which belonged to one of the spouses on the right of private property, dissolves, levels, loses, or becomes so insignificant, insignificant compared to the real estate object that appeared under the time of marriage as a result of joint labor or monetary expenses of the spouse or another spouse who is not the owner.
In general, major repairs or refurbishment of housing, ie significant conversion of real estate, should be taken into account. Current repairs of housing and change of its purpose from residential to non-residential without capital re-equipment will not give grounds for recognizing such an object as a joint property of the spouses. After all, the object itself has not undergone significant changes, and these transformations cannot be considered to have significantly increased the value of the property.
If the court finds that the costs incurred by another spouse – not the owner, but does not recognize such costs are significant, the spouse may claim reimbursement of expenses incurred if the latter incurred during the marriage.
Significant contribution
The second significant factor in such an increase should be related to the total cost of labor or labor costs. The mere fact that a person is married during a period when personal property or its value has increased significantly is not a ground for recognizing it as joint property.
In determining the legal status of the disputed property as joint property of the spouses, the court must take into account that the share in such property is determined according to the actual contribution of each party, including property acquired by one spouse to the marriage, which is his personal private property. , in the acquisition (acquisition) of property. If, in addition to joint funds, personal private funds of one of the parties are invested in the acquisition (construction) of property, the share in such property by the amount of the contribution is its property. Therefore, if, as a result of work and money invested, the property has changed significantly and increased in value, the ownership of such property should be distributed according to the contribution of each spouse. If, for example, it is found that the changes are about 60% of the property, the shares are distributed as follows: 30% of the husband and wife (as 1/2 of the joint ownership) and 30% of the husband/wife who owned the property before the significant changes.
If such property is leased, the subsequent income must be divided according to the shares of individuals.
Entrepreneurship
The question that worries many: is it possible to share the profits from the activities of a natural person – an entrepreneur, which is a husband/wife? Yes, you can. However, to properly address this issue, it is necessary to distinguish between what is income and what is the profit of a private individual.
Income is calculated as the total amount of money received from the sale of goods or services, and profit is income from fewer taxes, costs of production, purchase, and sale of goods or services.
Accordingly, the gross income received on the account is not recoverable, but the profit is subject to distribution, ie the money that the private individual received in the form of a surplus after payment of all taxes, fees, and charges. This fact must be proved on general grounds.
Yes, you need to provide evidence of what income the person received, what taxes and other fees were paid, and calculate net income. And it will be the property that is subject to division.
The corresponding position was expressed by the CCC in the decision of 30.09.2021 (case №755 / 20605/15-ts). The court said that the requirement to collect income from business activities is not subject to satisfaction given that the reporting referred to by the person reflects the gross income of a natural person – an entrepreneur. For tax purposes, such income is calculated as the total amount of money received from the sale of goods or services, while profit is income from fewer costs of production, purchase, and sale of goods or services.
CONCLUSION
Thus, the funds claimed by the defendant include not only the profit (earnings) of the entrepreneur, which could be recognized as the object of joint ownership of the spouses but also the funds, which include the cost of production and sale of products.
However, no evidence of net income received by such a business entity during the stated period was provided. Defendant did not in any way confirm that the proceeds received by her were transferred by her or otherwise received by the plaintiff.
