When a couple marries in community property, one of the most common doubts during a divorce is what happens to the family home, especially if common savings have been invested in it. In this sense, Laura Lobo, a lawyer specialized in family and inheritance, explains what happens in these cases when community money is invested to do work on a house that is private property (which belongs only to one of the spouses).
As Laura Lobo explains in a video published on her TikTok channel, if a married couple “invests an amount of money in doing work on a house that only belongs to one of the spouses on a private basis,” the ownership does not change. “If they divorce, what would happen? … The house is still private.”
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The house is still private, but the community property is a creditor
The key to this issue is found in the Civil Code, where it makes the distinction between assets. Private assets are those that belonged to each spouse before the marriage and those received later by inheritance or donation. On the other hand, marital assets are those obtained through the work or industry of either spouse, that is, common savings.
When community money (such as wages) is used to improve a private asset (an inherited house, for example), the law is clear. “The law establishes that when improvement works are carried out in a house that is private in nature, but these works are paid for with joint money…, the house is still private in nature,” explains Lobo.
Now, this does not mean that the non-owning spouse loses that investment, since the Civil Code, in its article 1359, explains that “the community property is a creditor of the increase in value that that house has experienced as a result of the works.”
To understand it better, it means that in the event of divorce, the spouse who owns the house must pay to the common fund the money equivalent to the increase in value that the home gained thanks to the works that were paid for between the two.
Thus, in practice, the spouse who invested common money has the right to recover half of the increase in value generated by that investment. Laura Lobo summarizes it with a clear example: “If the house is worth 100, works are carried out that increase its value to 120, the spouse who owns the house owes the increase in value to the community property. That is 20.”
That credit of 20 (the increase in value) must “be included in the liquidation of the community property.” At the time of divorce, this amount is added to the assets of the company (along with the rest of the common property) and, by dividing the total in half, the non-owning spouse recovers the 10 that corresponded to him for that investment.
The works and settlement must be documented
Lobo explains that for this right of reimbursement to be effective, both the investment made (with invoices and bank statements) and the increase in value that the property has experienced (through appraisals) must be proven.
This right of credit of the community property against the owner spouse is regulated in the Civil Code (which can be consulted in this BOE) where it explains what private and community assets are, and how improvements paid for with common money generate a right of reimbursement in favor of the company, which will become effective in the liquidation.
Ignoring this “increase in value” in the liquidation of assets can lead to an unfair distribution of the common assets and complex judicial procedures to claim these amounts. Therefore, it is always important to document everything and even more so when private and marital assets are mixed.
“The law protects the investment of the community property, even though the house remains private,” explains Lobo. “It is not about the non-owning spouse losing their money, but about correctly calculating the increase in value to include it in the distribution.”