Winding up the sociedad de gananciales: inventory, reimbursements and allocation where there is no agreement

Dissolving is not dividing

The sociedad de gananciales is dissolved by the judgment of divorce, separation or nullity, and also by agreement between the spouses in capitulaciones or by order of the court in the cases of art. 1393 CC (fraudulent management, desertion, de facto separation for more than a year) or where common assets are attached for one spouse’s own debts (art. 1373 CC). From that moment no new assets come into it, but those already there remain common until they are divided: an inventory is drawn up, the debts are paid and what is left is split in half (arts. 1392 to 1410 CC).

A long time can pass between dissolution and division, and that post-dissolution community is a source of conflict: who uses what, who pays the mortgage, what happens to the rent from a let property or to the dividends from the company. An early division avoids a good part of those conflicts. The right to apply for the division is not subject to any limitation period, but the evidence is lost all the same.

What is common property and what is separate

This is the first battle and the most frequent one. The law presumes that everything in the marriage is common until the contrary is proved (art. 1361 CC), so the spouse who says an asset is their own has to demonstrate it.

• Separate property (art. 1346 CC) means the assets each spouse had before marrying, those received afterwards by inheritance or gift, those acquired at the cost of other separate property (substitution), clothing and personal effects not of extraordinary value, the tools of a profession and compensation for personal injury.
• Common property (art. 1347 CC) means salaries and earnings from work, the income and fruits both of common assets and of separate ones (the rent from an inherited flat is common property), whatever is bought with common money and businesses founded during the marriage with common funds.
• What is bought partly with separate and partly with common money belongs to both estates in proportion (art. 1354 CC). The spouses may give the character of common property to what they buy together even where the money was separate (art. 1355 CC), which is then set off by a right of reimbursement.
• A home bought by instalments before the marriage by one spouse alone is separate property, except the family home, which is divided between the two estates in proportion to what was paid before and after the wedding (art. 1357 CC).

The operations of a winding up

Inventory

An asset side is drawn up (property, balances, shareholdings, claims of the common estate against each spouse, reimbursements included) and a liability side (debts of the common estate to third parties, such as the mortgage, and to each spouse). Assets are valued as at the time of the division, not as at the separation, with a formal valuation where there are properties or a business.

Payment of debts and of claims between the spouses

The debts to third parties are paid first (or taken over with security) and then the reimbursements to each spouse (arts. 1399 to 1403 CC). What is left is the residue, which is divided in half (art. 1404 CC).

Allocation

Each spouse receives assets to the value of their half. The law gives each a right of preferential attribution over certain assets (art. 1406 CC): items of personal use, the business or undertaking they ran, the premises where they practised their profession and, only where the other spouse has died, the habitual home (art. 1406.4.º CC): on a divorce there is no statutory preference over the home. A spouse who takes an asset worth more than their half compensates the other in money; as to the premises, they may ask to be given only the use of them (art. 1407 CC). Allocations in payment of a half share of the common property are exempt from transfer tax (art. 45.I.B.3 of its consolidated text) and do not count as a disposal for income tax purposes (art. 33.2.b of the Income Tax Act), although the spouse receiving the asset keeps its original value and date of acquisition; excess allocations compensated in money may be taxable.

How it is done where there is no agreement

If the spouses agree, the division is made in the convenio regulador itself or in a later deed before a notary. If they do not, the Civil Procedure Act provides a specific procedure (arts. 806 to 810 LEC) before the same court that dealt with the divorce, in two stages:

• Drawing up the inventory (arts. 808 and 809 LEC): one spouse puts forward a proposed inventory; the other is summoned to a hearing and, if they disagree about the inclusion or exclusion of any asset or debt, the dispute is resolved by way of the juicio verbal — the simplified civil trial — with a judgment. It is here that it is decided whether the flat is separate property, whether the company is common property, or whether there is a reimbursement.
• The division itself (art. 810 LEC): once the inventory is final, a proposed division is put forward with the valuation, the payment of debts and the allocations. If there is no agreement at the hearing, the court appoints a contador-partidor, an accountant-divider (and experts if they are needed), who carries out the division, with the same opposition and approval stages as in the division of an estate (arts. 785 et seq. LEC).

It is a long procedure if everything is argued about. Experience says it is worth concentrating the argument on the two or three items that genuinely change the result and agreeing the rest. It is the same work of inventory, valuation and allocation that we do in estate divisions, and the two matters frequently arise in the same family.

Cases that complicate a winding up

• A home with a mortgage: the debt is common and is paid in equal halves regardless of who uses the house; what one spouse alone pays after the divorce is reimbursed to them out of the common fund on the division (art. 1364 CC). If one spouse takes the house, they will have to take on the loan and, almost always, negotiate the other’s release with the bank. We explain this in the guide to the family home.
• A business or shareholdings: if it was founded during the marriage with common funds it is common property even if it is in one name only; its valuation (book value, market value, with a discount for lack of control) is the most heavily disputed point. We deal with it under divorce with substantial assets.
• Inheritances and gifts received during the marriage: they are separate property, but the trail is lost if the money was mixed into the joint account. Where every euro went has to be reconstructed.
• Assets abroad and crypto-assets: they have to be located and valued with evidence (statements, registers, reports), and their character follows the same rules as everything else.
• Pension plans and savings policies: on the majority view, contributions made with common money during the marriage are counted in favour of the common estate even though the policy is in one name; how that is compensated is argued case by case.
• Salary and dividends between the de facto separation and the divorce: until there is a dissolution they remain common property; a long de facto separation may qualify that on the case law, but not automatically.

Deadlines worth not letting slip

• Drawing up the inventory can be applied for from the moment the divorce petition is admitted (art. 808 LEC); the division requires the dissolution to be final (art. 810 LEC). There is no limitation period, but every year that passes makes the evidence and the reimbursements harder.
• Disputes over the inventory are resolved by juicio verbal; opposition to the contador-partidor‘s proposal follows the time limits for the division of an estate (ten working days, art. 787 LEC).
• Transfer tax and the municipal land value tax do not fall on allocations in payment of a half share of the common property; excess allocations compensated in money must be declared within thirty working days of the deed.

Where we work

Our office is in Villanueva de la Cañada, and we act regularly in Brunete, Villanueva del Pardillo, Valdemorillo, Quijorna, Majadahonda, Las Rozas, Boadilla del Monte, Pozuelo de Alarcón and the rest of western Madrid. Divorces are heard by the court of first instance for the last matrimonial home; where the spouses already live in different judicial districts, the party bringing the claim may choose between that last home and the respondent’s residence (art. 769 LEC). Villanueva de la Cañada, Brunete, Quijorna and Boadilla del Monte belong to the judicial district of Móstoles; Valdemorillo and Villanueva del Pardillo to that of San Lorenzo de El Escorial; Majadahonda and Las Rozas to that of Majadahonda; Pozuelo de Alarcón has its own. This guide forms part of our divorce practice.