In our legal system and in the context of marriage, the spouses can freely determine the property regime to be in force during the marriage.
Specifically, there are three different property regimes: a) general communion regime (see articles 1732 to 1734); b) acquired communion regime (see articles 1721 to 1731); and c) separation regime (see articles 1735 and 1736).
In general terms, with regard to these regimes, it should be specified that if no prenuptial agreement has been signed to determine the applicable regime (or in the event of its expiry, invalidity or ineffectiveness), the supplementary regime of communion of acquisitions will apply (cf. art. 1717), which is why this is the predominant regime.
One of the exceptions to the choice of regime is if one of the spouses is sixty years old or older, in which case the mandatory regime of separation of property will apply (cf. art. 1720.1 b)).
*
Within the scope of the (supplementary) community of acquisitions regime, the assets that each spouse has at the time of the marriage are considered to be their own assets, among others (cf. art. 1722(1)(a)) (money being a movable asset (cf. art. 205)).
The crux of the problem here has to do with subrogated assets in the place of one's own assets, where, under the terms of Article 1723(c), “Assets acquired or improvements made with money or valuables belonging to one of the spouses shall retain the status of one's own assets (...), provided that the origin of the money or valuables is duly mentioned in the document of acquisition, or in an equivalent document, with the intervention of both spouses”.
In other words,
According to the text of the law, and using practical examples, we would have that, during the marriage, and with the supplementary regime of communion of acquisitions in force,
a) an asset (movable - e.g. car; or immovable property) acquired with one spouse's own money by the other spouse would make the asset a community asset;
b) an asset (movable - e.g. car; or immovable property) acquired with one spouse's own money by their respective spouse would cause the asset to become a community asset; and
c) an asset (movable - e.g. car; or immovable property) acquired with one spouse's own money by both spouses, without mentioning where it came from (and thus the nature of the asset) would cause the asset to become a community asset;
Specifically, according to the letter of the law, in order for this subrogation to operate, safeguarding the right of the spouse who owns the separate property, two cumulative requirements must be met: a) it must be stated in the respective document that the property was acquired with proceeds from (or that they themselves constitute) the separate property of one spouse; and that both spouses intervene in the document.
Thus, in the aforementioned examples, and considering the wording of Article 1723(c), the money/goods used for the aforementioned purposes would then become part of the couple's common property, losing their quality as “own property” upon the eventual dissolution and division of the community.
The situation in question has been the subject of much discussion in case law and doctrine, giving rise to different interpretations. It was through Supreme Court Ruling no. 12/2015 that the interpretation of the wording was settled, standardizing case law and prevailing an understanding that does not conform to the exact letter of the law, but is in line with the thinking underlying the legal system.
Case law has thus been established to the effect that
“Since only the interests of the spouses are at stake, and not those of third parties, the omission from the acquisition deed of the mentions set out in Article 1723(c) of the Civil Code [mention of the origin of the money or valuables and the intervention of both spouses] does not prevent the spouse, who is the exclusive owner of the means used to acquire other assets during the marriage under the supplementary regime of community of acquisitions, and even if [he/she] did not intervene in the acquisition document, from proving by any means [and here s. m.o. even indirectly, with proof of the subsequent acts until obtaining the value/goods used for the purpose of acquisition] that the asset was acquired. m.o. even if indirectly, with proof of subsequent acts until the value/good used for acquisition purposes is obtained], that the good was acquired only with money or their own assets; once this proof is made, the good is their own and does not form part of the marital community”.
The disagreement between the High Courts' understanding and the exact text of the law thus stems from the possible existence of interested third parties/interveners in the contracts, since, if they exist, their legal position will only be guaranteed if the nature of the asset as their own is expressed, thus leaving the third party in a position to assess the possible fragility of their legal position, due to the consequences inherent in the nature of their own asset.
To sum up,
The two cumulative requirements set out in Article 1723(c) will be a necessary condition for subrogation only if there are interested third parties. Otherwise, it is not necessary for them to be met for subrogation to operate.
*
Finally, partly in line with the above, although different from the situation analyzed here, the following situations regarding the respective property regimes should be highlighted:
a) under the terms of article 1726, property acquired in part with money or property belonging to one of the spouses and in another part with money or common property has the nature of the more valuable of the two benefits” (no. 1), with compensation always being safeguarded in favor of the spouse who transferred property or money of their own when the community is dissolved and shared (no. 2); and that
b) under the terms of Article 1791(1), where the separation of property regime is in force, even if both spouses intervene in the signing of the deed for the acquisition of a property, and even if it is for their own permanent residence, and the property used for this purpose is the property of one of the spouses, in the event of divorce, it will be lawful for the spouse who owned the property/value used for this purpose to claim half of the expenses incurred in the acquisition of the property, as this is a benefit received in consideration of the married state.
Final note: All references to articles refer to the Civil Code.
Comments