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Divorce, how to divide property? Look: China Court Judgment Standards (2)

July 1, 2023

III. How to handle the issue of capital contribution in limited liability companies, partnership organizations, etc. when dividing property

1. When the people's court hears a divorce case involving the division of the joint property of the husband and wife, if one party contributes in the name of a limited liability company and the other party is not a shareholder of the company, the following situations shall be handled separately:

(1) If both the husband and wife agree to transfer part or all of the capital contribution to the spouse of the shareholder, and if more than half of the shareholders agree or other shareholders explicitly waive the right of first refusal, the spouse of the shareholder may become a shareholder of the company;

(2) After both the husband and wife reach a consensus on the transfer of shares and transfer price of the capital contribution, if more than half of the shareholders do not agree to the transfer but are willing to purchase the capital contribution at the same price, the people's court may divide the property obtained from the transfer of capital contribution. If more than half of the shareholders do not agree to the transfer or are unwilling to purchase the capital contribution at the same price, it shall be deemed that they agree to the transfer, and the spouse of the shareholder may become a shareholder of the company.

The evidence used to prove the consent of more than half of the shareholders as stipulated in the preceding paragraph can be a resolution of the shareholders' meeting or a written statement from the shareholders obtained by the parties through other legal means.

2. When the people's court hears a divorce case involving the division of the joint property of the husband and wife in the partnership enterprise in the name of one party, and the other party is not a partner of the enterprise, when the husband and wife reach a consensus through negotiation to transfer all or part of their share of the property in the partnership enterprise to the other party, the following situations shall be handled separately:

(1) If the partners unanimously agree, the spouse shall obtain partner status in accordance with the law;

(2) If other partners do not agree to the transfer and exercise the right of first refusal under the same conditions, the property obtained from the transfer may be divided;

(3) If other partners do not agree to the transfer or exercise the right of first refusal, but agree to the partner's withdrawal or return of part of their property shares, the returned property may be divided;

(4) If other partners neither agree to the transfer nor exercise the right of first refusal, nor agree to the partner's withdrawal or return of part of their property shares, it shall be deemed that all partners have agreed to the transfer, and the spouse has obtained partner status in accordance with the law.

3. If a couple invests in the establishment of a sole proprietorship enterprise in the name of one party, the people's court shall handle the joint property of the couple in the sole proprietorship enterprise according to the following circumstances:

(1) If one party advocates to operate the enterprise, after evaluating the assets of the enterprise, the acquiring party shall provide the other party with corresponding compensation;

(2) If both parties advocate to operate the enterprise, on the basis of both parties' bidding, the party that obtains the enterprise shall provide corresponding compensation to the other party;

(3) If neither party is willing to operate the enterprise, it shall be handled in accordance with the Law of the China on Wholly Owned Enterprises and other relevant provisions.

IV. How to handle the issue of ownership of houses

1. When both parties fail to reach an agreement on the value and ownership of the house in the joint property of the husband and wife, the people's court shall handle it separately according to the following circumstances:

(1) If both parties claim ownership of the house and agree to obtain it through bidding, permission shall be granted;

(2) If one party claims the ownership of the house, the evaluation agency shall evaluate the house at the market price, and the party who obtains the ownership of the house shall provide corresponding compensation to the other party;

(3) If neither party claims ownership of the house, the proceeds shall be divided based on the application of the parties involved in the auction of the house.

2. If there is a dispute between the two parties regarding a house that has not yet obtained ownership or full ownership, and negotiation fails, the people's court should not make a judgment on the ownership of the house, but should make a judgment on the use of the house by the parties based on the actual situation.

If there is a dispute after the parties have obtained full ownership of the house specified in the preceding paragraph, they may file a separate lawsuit with the people's court.

V. On the handling of the right to rent public housing after divorce

1. After divorce, both parties can rent a public house where the husband and wife live together under one of the following circumstances:

(1) Public housing rented by one party before marriage, with a marriage relationship lasting for more than 5 years;

(2) The house rented by one party before marriage and both parties are employees of the unit at the time of divorce;

(3) If one party obtains the right to rent a public house by borrowing money before marriage to invest in building a house, and the couple repays the loan together after marriage;

(4) After marriage, one or both parties apply for the right to rent public housing;

(5) A public house rented by one party before marriage, but obtained the right to rent the house after marriage due to the demolition of the leased house;

(6) Joint construction or joint purchase of jointly owned houses by both spouses' units;

(7) If one party returns the leased property of their own unit to their own unit or hands it over to the other party's unit, and the other party's unit exchanges the property:

(8) Both parties rented public housing before marriage, but merged and exchanged houses after marriage;

(9) Other situations that should be recognized as both spouses can rent.

At the time of divorce, both spouses can rent public housing, and if the area is large enough to be separated and used in separate rooms, both parties can rent it separately; Permission may be granted for those who can rent separate houses or for the lessee to provide housing solutions to the other party.

2. Handling the issue of one party not having the right to rent a public house rented by the other party before marriage during divorce

(1) If one party has no right to rent a public house rented by the other party before marriage, in principle, they should solve the housing problem themselves after divorce;

(2) If there is indeed no room to live in after divorce, and it is difficult to solve the problem of housing by oneself, the party without the right to rent can mediate or judge to temporarily reside, and the temporary residence period generally does not exceed two years. During the temporary residence period, the temporary resident shall pay a usage fee equal to the rent of the house and other necessary expenses;

(3) At the time of divorce, if one party has no right to rent the public house rented by the other party before marriage and there is indeed economic difficulty in renting another house, if the other party has the ability to afford the public house, they should provide one-time financial assistance.

3. Handling the issue of adjusting and changing the leasing relationship of self managed houses by units

The people's court should seek the opinions of the self-managed housing unit when adjusting and changing the leasing relationship of the unit's self-managed housing (including the housing entrusted to the real estate management department by the unit). If the lease relationship of the house is changed through mediation or judgment, the lessee shall handle the registration procedures for the change of the house in accordance with relevant regulations.

(to be continued...)