In today's society, a topic that is inseparable from the national economy and people's livelihood of ordinary citizens is real estate. Among them, when parents contribute funds to purchase a house for their children, and the children divorce, is the contribution a unilateral gift to the child or community property of the couple? Disputes over this issue have been increasing in recent years. So after the implementation of the "Civil Code" which officially came into effect on January 1, 2021, what are the provisions for the division of real estate upon divorce when the house is purchased with different funding situations?

On January 1, 2021, the Interpretation I of the Supreme People's Court on the Application of the Marriage and Family Chapter of the "Civil Code of the People's Republic of China" officially came into effect, which made significant revisions to the determination of parents' funding for their children's house purchase after the children are registered for marriage. The original Judicial Interpretation II of the "Marriage Law" (now invalid) stipulated: "The contribution shall be deemed as a gift to both spouses, unless the parents clearly express that it is only given to one party"; the Judicial Interpretation III of the "Marriage Law" (now invalid) stipulated: "If the property right is registered only in the name of their child, it shall be deemed as a unilateral gift to their own child." However, the current Interpretation (I) of the Marriage and Family Chapter of the "Civil Code" stipulates: "If there is an agreement, it shall be followed; if there is no agreement or the agreement is unclear, it shall be presumed to be a gift to both spouses." That is to say, after the implementation of this judicial interpretation, if parents contribute to their children's house purchase after marriage, and there is no agreement or the agreement is unclear, whether it is full funding or partial funding, whether it is registered in the name of one party or both parties, it shall be presumed to be community property of the couple and jointly owned by the couple.

Case Interpretation:"Zhang Xiaoqin Divorce Property Dispute Case"

In June 2021, Zhang Xiaoqin (pseudonym) and Li Xiaojun (pseudonym), who had known each other for two months, registered their marriage at the Civil Affairs Bureau of Minhang District, Shanghai, and officially became husband and wife. Since both spouses had just started working and had no savings, they lived in a rental house for a long time. Zhang Xiaoqin's parents, seeing that their daughter had been living in a rental house and fearing that her life was not secure, sold their self-occupied three-bedroom apartment and bought two smaller houses, one for their own residence and the other as a wedding gift to their daughter Zhang Xiaoqin. At that time, the couple and the parents had a private communication that the house was a wedding gift from Zhang Xiaoqin's parents to their daughter and belonged to Zhang Xiaoqin's personal property, and the property certificate would only be registered in Zhang Xiaoqin's name. Li Xiaojun and his parents agreed. In October 2021, Zhang Xiaoqin and Li Xiaojun decided to divorce due to emotional discord, but during the divorce agreement process, they could not reach an agreement on property division. Regarding the currently occupied house (i.e., the property gifted by Zhang Xiaoqin's parents to Zhang Xiaoqin), Li Xiaojun's family believed that although the down payment was funded by his parents-in-law, Li Xiaojun had also repaid the loan for the house, so it should be community property of the couple and should be equally divided between the two parties. As for Zhang Xiaoqin's mention that they had reached an agreement on the property right of the house, Li Xiaojun stated that no written agreement had been signed and did not承认曾承诺过此事.

Later, the two parties filed a lawsuit with the court regarding the post-divorce property dispute. After trial, the court ruled that the house was community property of the couple and should be jointly distributed by the couple.

Lawyer's Interpretation:

From this case, we can see that regarding the determination of parents' funding for house purchase, there have been relatively clear judicial handling opinions after the official entry into force of the "Civil Code":

1. If parents contribute to purchase a house for their child after marriage and the property is registered only in one person's name, in the absence of a clear agreement, the court presumes it to be community property of the couple.

In this case, although Zhang Xiaoqin's parents had informed all parties when purchasing the house for her that the house was only a gift to Zhang Xiaoqin personally and had nothing to do with her spouse, and all parties agreed, due to lack of relevant legal knowledge, her parents did not prepare a written document clearly stating that it was only a gift to their daughter. As a result, it was difficult to convince the trial judge during the divorce property litigation. If in accordance with the provisions of the Interpretation III of the "Marriage Law" (now invalid), "if the property right is registered only in the name of their child, it shall be deemed as a unilateral gift to their own child," the house could be认定为张小琴的个人财产. However, since the "Civil Code" and relevant judicial interpretations came into effect, according to the latest laws and regulations, if there is no agreement or the agreement is unclear, it shall be presumed to be community property of the couple first.Based on this, in this case, Zhang Xiaoqin's family lost half of the house assets due to lack of relevant legal knowledge, which is regrettable.

2. Determination of "clear agreement"

From the above case, we can see that if we want to avoid the risk of parents' funding for their children's house purchase being认定为夫妻共同财产, the most important thing is to make a clear agreement in advance. Therefore, we suggest that in the future, when parents contribute to buy a house for their children after marriage, it is best for the parents, the child, and the child's spouse to sign a written agreement together, clearly stipulating whether the nature of the parents' contribution is a loan or a gift. If it is a gift, it is necessary to clearly stipulate whether it is only given to the child or to the child and his/her spouse. If it is a loan, stipulate the interest and repayment period, etc. Do not follow the example of Zhang Xiaoqin's parents in this case, who, due to the relationship with their in-laws and being afraid of losing face, led to property disputes due to no prior clear agreement on property when the two parties divorced later.

3. Special attention

If parents contribute to buy a house and do not clearly express it as a gift, it will generally be regarded as a loan. At this time, if the property is community property, the debt shall be a joint debt of the couple. If the property is the personal property of one party, the debt is generally认定为一方的个人债务.