The breakdown of a marriage or the separation of spouses does not only bring personal and family changes. It often also gives rise to important issues concerning property acquired during the marriage, the financial contributions of each spouse, and whether one spouse is entitled to claim a share in the increase of the other spouse’s property.
In Cyprus, matrimonial property relations are governed primarily by the Regulation of Property Relations between Spouses Law of 1991, Law 232/1991, as amended.
Marriage Does Not Automatically Create Joint Property
A common misconception is that, upon marriage, all property belonging to the spouses automatically becomes joint property.
This is not the case in Cyprus.
A fundamental principle of Cyprus law is the financial and property independence of spouses. Marriage itself does not alter ownership of assets belonging to either spouse. Therefore, immovable property, bank accounts, shares or other assets registered in the name of one spouse do not automatically become jointly owned simply because of the marriage.
However, where the property of one spouse has increased during the marriage and the other spouse contributed to that increase, a matrimonial property claim may arise.
What Is a Claim for Participation in the Increase of the Other Spouse’s Property?
Under section 14 of the Law, where a marriage has been dissolved or annulled, or where the spouses are separated, and the property of one spouse has increased, the other spouse may, provided that he or she contributed to that increase, claim the part of the increase corresponding to his or her contribution.
Accordingly, the claim does not necessarily concern 50% of the other spouse’s total property.
The matters generally examined include:
- the property position of each spouse
- the extent to which that property increased during the relevant period
- whether the other spouse contributed to that increase and
- the actual extent of that contribution.
The One-Third Presumption
An especially important feature of Cyprus law is the presumption of one third (1/3).
The Law provides that the contribution of one spouse to the increase of the other spouse’s property is presumed to amount to one third of that increase, unless it is proved that the actual contribution was greater or smaller.
For example, if it is established that the net property of one spouse increased by €300,000 during the marriage, the statutory presumption would initially place the other spouse’s contribution at €100,000.
This does not mean that €100,000 is automatically awarded. The presumption may be rebutted by evidence from either spouse.
What Is Considered a “Contribution”?
Contribution is not limited exclusively to direct financial payments.
The Law recognises any form of contribution to the acquisition or creation of property, including expressly the care of the family home and the members of the family.
Depending on the facts of each case, the following may therefore be taken into account:
- direct financial payments towards the purchase of immovable property
- repayment of loans or other financial obligations
- investment in or financial support of the other spouse’s business
- work performed in a family business
- payment of household and family expenses
- upbringing and care of children
- management and care of the family home and
- any other form of contribution which enabled or facilitated the increase of the other spouse’s property.
The recognition of non-financial contributions is particularly important, as in many families one spouse may focus on professional or business activities and wealth creation, while the other assumes a greater share of responsibility for the home and family.
What Happens to Property Owned Before the Marriage?
Property owned prior to the marriage is particularly relevant when calculating a matrimonial property claim.
The purpose of the procedure is not to divide mechanically the entirety of one spouse’s property. Rather, the relevant question is the increase in the property that occurred during the relevant period.
For that reason, evidence of the financial position of the spouses both at the beginning and at the end of the relevant period can be decisive.
Inheritances and Gifts
The Law excludes from the calculation of the increase in property assets acquired through:
- gifts
- inheritance
- testamentary dispositions or
- other gratuitous causes.
Subject to the provisions of the Law, property acquired from the disposal of assets originating from such sources may also be excluded.
Therefore, the fact that one spouse inherited an immovable property during the marriage does not, in itself, mean that the other spouse automatically becomes entitled to one third of its value.
Property Registered in the Name of One Spouse
The fact that the family home or another immovable property is registered solely in the name of one spouse does not, by itself, prevent the other spouse from having a matrimonial property claim.
For example, where the other spouse contributed financially to the purchase of the property, repayment of a loan, construction, substantial improvements or otherwise contributed to the increase of the owner spouse’s property, such contribution may be taken into account by the Court.
For this reason, in matrimonial property disputes it is not sufficient merely to examine whose name appears on the title deed.
Businesses, Companies and Shares
Matrimonial property disputes may become more complex where one spouse has significant business interests.
It may be necessary to examine:
- the value of shares
- any increase in the value of a company
- business interests
- bank accounts
- investments
- dividends
- shareholder or director loans
- immovable property held through companies and
- other financial interests.
In such cases, proper financial valuation and the collection of appropriate evidence may be crucial.
What Happens if One Spouse Transfers Property to Avoid a Claim?
In some cases, after separation, one spouse may attempt to sell, gift or transfer assets with the intention of frustrating or reducing the other spouse’s matrimonial property claim.
Cyprus legislation contains provisions addressing fraudulent dispositions or transfers of property.
Depending on the circumstances, it may also be necessary to seek timely court measures aimed at protecting the disputed assets until the matter is finally resolved.
Can the Court Order the Transfer of Property?
Yes. The Family Court is not necessarily limited to awarding a monetary amount.
In appropriate cases, the Law gives the Court the power to issue an order for the transfer of property to the applicant.
Furthermore, where ownership of property is transferred between former spouses following the dissolution of the marriage pursuant to a court order or judgment resolving their matrimonial property disputes, the Law provides for exemptions from certain Land Registry fees and charges.
What Evidence Is Important?
Matrimonial property cases depend to a significant extent on the evidence available.
Depending on the case, relevant evidence may include:
- title deeds
- sale agreements
- bank statements
- evidence of bank transfers
- loan agreements
- receipts and proof of payments
- tax records
- company financial statements
- records concerning shares and business interests
- valuations of immovable property or businesses
- correspondence between the spouses and
- testimony concerning the functioning of the family and the contribution of each spouse.
The timely collection and preservation of such evidence is particularly important.
Is There a Time Limit for Bringing a Claim?
Yes, and this is a matter requiring particular attention.
A claim relating to participation in the increase of the other spouse’s property is generally time-barred three years after the dissolution or annulment of the marriage, in accordance with section 15 of the Law.
For this reason, a person who believes that he or she may have a matrimonial property claim should not allow significant time to pass without obtaining specialised legal advice.
Can Spouses Resolve Their Property Dispute Without Going to Court?
Yes.
Where the parties are able to reach an understanding, an out-of-court settlement may provide a faster and more cost-effective solution.
A comprehensive settlement agreement may regulate, among other matters:
- the family home
- other immovable property
- monetary payments
- loans and liabilities
- company interests
- transfers of property and
- the full and final settlement of financial claims between the spouses.
It is important, however, that any such agreement is drafted clearly and that each party fully understands his or her rights and the financial consequences of the settlement.
Conclusion
Matrimonial property disputes are among the more complex areas of family law, as every case depends on its own particular financial and factual circumstances.
The fact that an asset is registered in the name of one spouse does not necessarily mean that the other spouse has no claim. Likewise, the fact that an asset was acquired during the marriage does not mean that the other spouse is automatically entitled to half of its value.
The key issues are the increase in property and the actual contribution made by each spouse to that increase.
Obtaining timely legal advice is particularly important both for the proper assessment of a possible claim and for the preservation of evidence and protection of assets until the dispute is finally resolved