Immovables' movements

Thu 10 September 2020, Philippe Ropenga Estate management

It has been seen that matrimonial estate management was a matter of physics in French law.¹ You know that a matrimonial estate is based on the communicating-vessel principle. You know also that I like to match theory with practice, especially when it comes to estate management.² Are you sure to understand how this basic principle works in practice? By the end of this post, you will know that you should concentrate on spotting movements (1.2) before setting the price of a piece of property (2.2).

1 Spotting movements

Financial flows make a person richer and another poorer (1.1). They happen under the matrimonial regime (1.2).

1.1 Between poorer and richer

Paying attention to financial flows in the context of estate management seems obvious because the manager, be it a trustee or a spouse, has to allocate resources.³ Does the practitioner note which spouse gets poorer while the other gets richer? No. Remember that an expense made by one spouse from his personal vessel to maintain common property is never compensated directly by a financial flow coming from the personal vessel of the other spouse and ending in the personal vessel of the spouse who has made the expense. Any reimbursement has to go through the community vessel.

Spouses have decided to organise their future matrimonial estate before marriage. They concluded a marriage contract and got married as expected. A dispute has arisen about the liquidation of the matrimonial estate resulting from divorce. The contract mentions that the husband transfers his rights over a personal immovable property to the community.⁴ The Court of Appeal has noted that the husband got poorer while the community got richer because of the transfer. This is an example of movements that are examined in matrimonial cases. Can the husband therefore claim compensation for the transfer?

Let us see what the Court of Appeal and the French Cour de cassation have decided.

1.2 Under the matrimonial regime

The Cour de cassation that is the supreme court that deals with civil, commercial, and criminal cases, has relied on Article 1433, §1 of the French civil code:

The community owes reimbursement to the owner spouse whenever it has drawn benefit from separate property.⁵

How would you apply this provision if you noticed that the husband had got poorer and that the community vessel had got richer by the same amount of money? The wife argued that the transfer had taken place at the same time as the creation of the community. The Court of Appeal has decided that identifying the financial flow was sufficient to show that the community owed reimbursement to the husband. Is reimbursement due for transfers that were made at the creation of the community? No. The Cour de cassation has found that the transfer of this property had been made at the creation of the community. Hence the husband could not claim compensation since this transfer had not happened after the community had been constituted.

It has been seen that a reimbursement was only due for transfers that occurred after the community vessel had been constituted and once spouses were on a matrimonial regime. Once a financial flow has been identified, it is necessary to determine the price of the rights involved in it to know how much to reimburse. Let us therefore pay attention to an issue that may be overlooked.

2 Setting the price

A price is static (2.1) whereas French patrimony is based on a dynamic approach (2.2).

2.1 A static price

The husband has had another reason to be sorry for the outcome of the divorce. The wife claimed an indemnity for his occupation of a common property. The husband objected that it could not be rented because of its run-down state. The Court of appeal followed his reasoning. The indemnity for private enjoyment of common property is dealt with by Article 815-9, §2 of the civil code:

The co-owner in indivision who uses or enjoys an undivided thing individually owes an indemnity, unless there is agreement otherwise.

The supreme court had to answer a question that can be formulated as follows: is this indemnity justified by the impossibility to rent the occupied property? The answer of the Cour de cassation is negative.

Let us see that the supreme court has followed a dynamic approach that is common to trusts and matrimonial regimes.

2.2 A dynamic approach

Anything that is legal and on the market has a price that has to be taken into account by the judge in liquidation proceedings; this is logical. There is no movement related to the run-down property between the common vessel and one of the spouses' vessel. One could therefore argue that no compensation is due in the absence of movement. This is also logical. The Cour de cassation has shown which of these two logical reasonings had legal effect. Matrimonial vessels and indivision do not perfectly overlap. Indivision is a temporary status that affects ownership. Hence, it is owner-centric and protects the owner's rights to the extent that it may cause serious management difficulties⁶ and enables an apparent owner to act as the true owner⁷. Matrimonial regimes on the contrary deal mainly with the right of a spouse to deal with his property, that of his spouse or that of the married couple. It favours a dynamic approach to enable to manage the marital property smoothly. Furthermore, you already know that a surviving spouse can sometimes receive a pension from the estate that is distinct from any ownership or testamentary right.⁸ There is more if one looks at this simple case from a comparative perspective. The hard core of a trust is not the legal title but the fiduciary duty. A similar peculiarity exists in French matrimonial law that pays greater attention to the power to interfere with a piece of property. Answering different questions leads to giving different answers.⁹ French law introduces dynamism in matrimonial estates with matrimonial regimes where English law relies on fiduciary law.

It has been seen that a common immovable property had a price and that its private enjoyment by one of the co-owners may be the ground for an indemnity claim. This static approach relies on the static conception of ownership in French property law that contrasts with the dynamic approach of a matrimonial estate that is at the core of French matrimonial regimes.

In brief, the field of trusts and estates is interesting because simple and practical solutions depend more on deep-rooted legal conceptions than on logic.

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