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October 15, 2012

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Property disputes remain top divorce pain

PROPERTY disputes remain the biggest problem in divorce cases more than a year after a judicial interpretation, which specifies many financial problems between spouses over marital assets, was introduced in China's Marriage Law, local lawyers said at a seminar on Friday.

The seminar on marriage and family law, organized by the Shanghai Bar Association, brought together more than 120 judges, lawyers and professors to discuss problems related to property division in divorce cases after the controversial interpretation took effect on August 13 last year.

The division of properties comes as the first and the hardest problem in divorce cases due to rising housing prices in China which appreciate the value of properties. Other factors such as shared loans and parents' gifts, usually money, also make the division more difficult.

It is common for Chinese parents to help their children pay loans even after the latter are married because housing prices are too high and young couples don't have much savings. But parents' good intentions could make things worse in divorce cases.

In one case, a Shanghai couple took loans to buy an apartment for 600,000 yuan (US$95,741) before they got married in 2003. The pair went to court after their divorce due to disputes over the apartment then worth about 3.5 million yuan.

During the hearing, the husband's mother claimed she had transferred 200,000 yuan into her son's account to pay loans and said this money should not be divided equally with her former daughter-in-law.

Whether the money was gifted to the husband alone or to the couple became a crucial point in the case, said Fu Zhongwen, a lawyer with the Shanghai Long'an Law Firm.

The court ruled that the 200,000 yuan was gifted to the couple as the husband failed to provide evidence that his mother intended it as a gift to him alone.

While common sense dictates that the money should be viewed as a gift to the husband alone when the mother didn't clarify which party she intended to gift, Fu said. "The apartment was bought before the couple got married and it was registered under the husband's name. Therefore, the loans should be seen as pre-marital debts and the husband's mother was paying for pre-marital debts, which is a gift to her son alone."

Wu Weiyi, deputy director of the civil law research committee of the bar association, conceded that Fu's opinion was reasonable but the court ruling was also right. "Fu and the judge hold different understanding of the judicial interpretation - in the broad sense and the narrow sense," Wu explained.

According to the seventh term in the judicial interpretation, if the property is bought by a party's parents and registered under this party after marriage, the property should be seen as gift to this party alone and owned by this party.

The court said the term couldn't be applied in this case because the money was used to pay for the loans rather than the down payment and there was no evidence the money was gifted to the son alone.

The judges and lawyer experts also discussed how to divide the appreciation part of the property and whether the gifts between spouses can be undone.

Fu said many clients had called to seek ways to avoid the law after the judicial interpretation was unveiled.

For instance, some clients would cheat their spouses by staying in a rental apartment and leasing their own house. They would then entrust their parents or agents to use the rent to pay for the loans, through which the loan part is not paid by the couple jointly and the apartment would be deemed as belonging to one party if a divorce happens.


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