Alongside child custody and maintenance, the family home is typically one of the most contentious issues in negotiating a separation or divorce settlement agreement, and one that generates the most conflict.
The matter runs so deep that, in many cases, it is precisely the dispute over the family home that prevents the parties from reaching any agreement at all, and may even make it impossible for the spouses or partners to formalise the separation.
What is meant by "family home"?
To begin with, the family home is understood to be the spouses' habitual and permanent residence, or any other property used as the main base for their personal, family and economic activities.
What criteria are taken into account when allocating the family home or its use?
In principle, the Catalan Civil Code places the agreement between the parties above all other considerations. The court allocates the family home to whichever spouse the parties have agreed upon, provided this does not conflict with the best interests of the child.
In this regard, it is well-established case law that agreements reached through a mediation process carry genuine weight in the court's decision on allocating the family home.
What does the law say exactly?
The criteria set out in the Catalan Civil Code for the allocation of the family home are as follows (Article 233-20.2):
- any agreement reached by the parties as to who will hold the right of use or be allocated the family home, which the court will approve provided it does not conflict with the best interests of the child;
- any agreement reached by the parties on a time-sharing arrangement for use of the home, which the court will approve provided it does not prejudice the child.
And if there is no agreement, how does the court decide?
If the parties cannot reach an agreement, the court decides according to the following criteria:
- preferential allocation to the parent who has custody of the children in common, for as long as that custody arrangement lasts;
- award to the spouse most in need of protection in the following cases:
- if custody is shared or divided between the parents,
- if the spouses have no children, or their children are of legal age, even if they are not financially independent from their parents,
- if, despite having awarded use of the family home on grounds of custody, it is foreseeable that the need will continue beyond the children reaching legal age,
- exceptionally, even where there are minor children, the court may award use of the family home to the non-custodial spouse if that spouse is the one most in need of protection and the custodial spouse has sufficient means to meet their own housing needs.
What is the primary criterion?
We note that the primary criterion, in the absence of an agreement, is consistent with the previous rules set out in Article 83.2(a) of the Family Code, namely, awarding the family home to the spouse who has been granted custody. However, under the current framework, the preference in favour of the custodial spouse is neither absolute nor automatic; rather, the law calls for consideration of the interests of the party most in need of protection, as an exception or limit to that criterion. As such, unlike under the Family Code, where the word "preferably" was to be interpreted very strictly, meaning that compelling reasons were required to depart from the general rule of awarding the home to the custodial spouse, that strictness has now been eased. It is now possible, in certain circumstances, to award the family home to the non-custodial spouse, provided that the custodial spouse has sufficient means and the other spouse represents the interest most in need of protection.
What is meant by the "interest most in need of protection" when determining use of the family home?
Since the concept of the interest most in need of protection is an open-ended legal standard, we must turn to case law to define it. The courts have interpreted this concept broadly, not limiting it solely to financial considerations.
Accordingly, the "greatest need" criterion used by the legislature is not to be assessed by reference to one spouse's lower economic capacity relative to the other, but rather by reference to a genuine need to occupy the family home. It is not sufficient simply to claim financial hardship; it must be demonstrated that the spouse in question needs to use the home in order to meet their housing needs, given their personal circumstances, because they cannot afford to pay for alternative accommodation.
Therefore, when referring to the interest most in need of protection, this encompasses all the specific circumstances of the particular case, in which consideration must be given not only to the economic situation of the spouse, but also to their age, employment status, state of health, and dependants.
It is worth noting that the judicial allocation of the family home (or rather, the right to use it) is always temporary, whether or not there are children, so that if the allocation was made on the basis of custody arrangements, the right of use will expire when custody ends. The same applies where the allocation was made on the basis of greater need: the right of use will cease once that need no longer exists.
¿What is the difference between a right of use and a right of use and enjoyment?
It is important to note that under Catalan civil law, the right of use is always granted to the parent alone, not to the parent and children jointly, even though custody arrangements are a key determining factor. It is also worth clarifying that what is judicially allocated is the right of use, not the right of use and enjoyment. These two concepts are frequently confused: the right of use is limited to the ability to reside in the property, whereas the right of use and enjoyment (usufruct) would entitle the beneficiary to let the property and derive an economic return from it. Accordingly, when a court allocates the family home, it does so in terms of the right of use only, not the right of use and enjoyment. That said, the parties remain free to agree whatever arrangement best suits their interests, and may enter into an agreement granting a right of use and enjoyment, which will be approved by the court unless it is contrary to the best interests of the child.
The court may substitute the allocation of the right to use the family home with alternative accommodation, provided it is suitable to meet the housing needs of the spouse and their children.
The right of use may be registered at the Land Registry, making it enforceable against third parties in cases where proceedings are brought to partition jointly owned property, as discussed below.
What is the "nest flat" arrangement? Is it advisable?
In shared custody arrangements, the family home may be used on an alternating basis by each parent (known in Spain as a piso nido, or "nest flat"); however, this arrangement is generally only suitable in exceptional cases and must genuinely serve the best interests of the children. Courts take the view that, as a general rule, having parents take turns living in the home where the children reside is unworkable and gives rise to significant practical problems.
The attribution of the right of use of the family home also serves as a means of providing maintenance for the children of the relationship who live with the beneficiary of that right, as well as a form of payment of the compensatory allowance.
What obligations does the attribution of the right of use entail?
The person to whom the right of use is attributed must take on a number of financial obligations, which are set out, in an innovative way, in the Catalan Civil Code. For the first time, the legislature requires the user to pay annual taxes and charges, namely the IBI (property tax), and further establishes that the person holding the right of use must also pay utility bills, ordinary service charges levied by the Owners' Community, and ordinary maintenance, upkeep and repair costs.
Must the parties request a ruling on the attribution of the family home or its use for the court to decide on the matter?
It is worth bearing in mind that the attribution of the right of use of the family home is made by the court only where the parties have requested it. This means that if neither party asks the court to adopt any measure in relation to the family home, no ruling on the matter will be issued.
When does the right of use come to an end?
Since party autonomy is the guiding principle in matters concerning the family home, subject to the limit we have already seen (the best interests of the child), the right of use will end when the circumstances agreed upon by the parties occur. In cases where the right was attributed by judicial decision, as noted above, it will cease when the custody arrangement ends (if it was granted in connection with custody) or when the underlying need ceases (if it was attributed on that basis). This will occur in the following circumstances, which, as we shall see, closely mirror the grounds for terminating a compensatory allowance:
- Improvement in the financial situation of the spouse benefiting from the right of use, or deterioration in the financial situation of the other spouse, where this justifies termination.
- Marriage or cohabitation of the spouse benefiting from the right of use with another person.
- Upon the death of the spouse entitled to use the property.
Once the right of use has been extinguished, the spouse who holds title to the property may recover possession of the family home by enforcing the ruling.
Is it possible to obtain an extension of the right to use the family home?
The law provides for the possibility of extending the time limit through a renewal. It is for the person holding the right of use to request the extension, and they must do so at least 6 months before the expiry date. The court will grant the extension if the circumstances that originally justified the allocation remain unchanged.
Another form of time-limited allocation involves granting use of the jointly owned family home until the co-ownership is divided or dissolved. It is good practice to combine any division of co-ownership with a maximum time limit, because without such a limit, the party holding the right of use could unduly delay the division in order to retain it.
Although we have stated that court-ordered allocations of the right of use are always time-limited, this does not prevent the parties from agreeing whatever arrangement suits them best, including a lifelong or indefinite allocation, provided this does not conflict with the best interests of any minor children.
GROUNDS FOR TERMINATION OF THE RIGHT TO USE THE FAMILY HOME
Another innovation introduced by Book Two of the Catalan Civil Code (CCC) is that, for the first time, the legislature has raised the possibility of use of the family home being SHARED between the spouses (Art. 233-20). The law addresses this option in the context of mutual agreement, which raises the question of whether a court may impose it in contested divorce proceedings.
Until now, this arrangement had been proposed in separation agreements, particularly in cases involving younger couples, and I have successfully put it forward in divorces without children, as a temporary measure until the property is sold. That said, the significance of this legislative development is that, by expressly regulating the option, it appears to open the door for a court to order it even in the absence of agreement between the parties. I share this view with Judge Mercedes Caso, who, in her insightful and practical presentation at the Family Law Conference organised under the auspices of Iuris Formació at Abad Oliva on 13 and 20 December, spoke in favour of this possibility, even in cases of dispute.
Indeed, it serves as a solution in cases where it is not possible to determine which family interest is most in need of protection.
There are further noteworthy developments in the new legislation regarding the use of the family home, including the possibility of satisfying a compensatory allowance by ASSIGNING the use of the family home (Art. 233-20 and Transitional Provision Three). Although this option is not set out in the provisions governing compensatory allowances as such, it is included in those governing the use of the family home. This is an interesting possibility whose tax implications I will examine in a future post, once I have studied the matter in detail.
There are other developments worth noting, but I would like to highlight one that has particularly caught my attention: the provisions relating to grounds for termination of the right of use. This is the first time that cohabitation with a new partner or remarriage has been established as a ground for terminating the right to use the family home (Art. 233-24.2(b)). This is closely linked to a principle that runs throughout the new legislation: the emphasis on the temporary nature of such assignment. For example, where the right of use is granted on the basis of the custody of minor children, the end of that custody arrangement may trigger the termination of the right of use, meaning that once the youngest child turns 18, the assignment of the right of use may be brought to an end, a matter that previous legislation did not address so directly. While termination may apply, the law also provides for the possibility of requesting an extension, in principle, one extension. But as I was saying, for the first time in the history of this legislation, it is clearly stated that the remarriage or cohabitation of the beneficiary spouse with a new partner constitutes a ground for terminating the right of use. However, this ground will only apply, as authoritative voices have pointed out, where the assignment was not granted on the basis of custody arrangements; if it was, and those arrangements remain in place, this ground cannot trigger termination. This was the position expressed by the speaker I referred to above. Some commentators have added, and I include this point here because I share it, that this ground may only be invoked in cases where both former spouses hold joint title to the family home.
Also noteworthy for its novelty and practical implications is the possibility of replacing the right of use with a financial payment. What is particularly attractive about this provision is that it will be possible to apply this measure to rights of use already assigned by virtue of court judgments handed down under the previous legislation, by bringing an application to vary the arrangements under Transitional Provision Three, paragraph 3 of Book Two of the Catalan Civil Code.
Finally, in a somewhat surprising move, the legislature provides that the party holding the right of use must pay all annually accruing taxes and charges, in addition, of course, to the ordinary costs of upkeep, maintenance and repair of the property (Art. 233-23). In other words, council tax (IBI) and equivalent charges become the sole responsibility of the holder of the right of use. This provision is notable, as case law had previously resolved the issue by reference to ownership, establishing that such taxes were payable according to the constitutive title.
HOW TO DIVIDE ASSETS IN A DIVORCE:
DISSOLUTION OF JOINT OWNERSHIP OF THE FAMILY HOME IN A DIVORCE
In separation, annulment or divorce proceedings, the spouses may divide jointly held property with respect to any assets they hold under ordinary co-ownership.
In many cases, the family home is owned 50/50 by both spouses. This raises the question of whether the attribution of the right of use to one party can prevent the other co-owner from exercising their right to seek partition of the property. Unless an indivision agreement has been reached, and such an agreement may not exceed ten years in duration pursuant to Article 552-10.2 of the Catalan Civil Code (CCCat), legal doctrine and case law accept that a claim for partition of jointly owned property is not precluded by the fact that a ruling in separation or divorce proceedings has specifically attributed the right of use to one of the co-owning parties.
Accordingly, an action for partition of the family home arises in circumstances where the spouses or members of a stable partnership hold the property in equal co-ownership and one of them does not wish to remain in joint ownership. In such cases, the law grants that party the right to bring a partition claim, which may be pursued both in the context of separation or divorce proceedings and in proceedings to vary an existing order.
Prior to the entry into force of the Catalan Civil Code, it was well established that a partition claim could be joined to separation or divorce proceedings, but not to applications to vary existing orders. However, following its entry into force, the Provincial Court of Barcelona has ruled in favour of permitting joinder in variation proceedings as well.
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TAX IMPLICATIONS OF DIVORCE: PARTITION OF JOINTLY OWNED PROPERTY
From the perspective of the Personal Income Tax Act (LIRPF), this type of transaction is treated as tax-neutral, since it always involves the specification of an undivided share of an asset, in essence, converting an abstract half-interest in a whole into a concrete undivided half of something tangible.
The Personal Income Tax Act provides that there is no change in the composition of an individual's assets in cases of partition of jointly owned property, dissolution of co-ownership arrangements, or separation of co-owners, provided that the allocation respects each co-owner's proportionate share of ownership. However, the Spanish Directorate General of Taxation (DGT) has established that a spouse who transfers their ownership share in exchange for money, another asset, or even gratuitously, will realise a capital gain equal to the difference between the transfer value of their share and its tax acquisition value.
Nor will it trigger any indirect taxation (Property Transfer Tax and Stamp Duty: ITPAJD), provided the situation genuinely involves a jointly owned property held in co-ownership by both spouses being dissolved by awarding 100% of it to one spouse in exchange for a cash payment to the other, and provided, furthermore, that the property is indivisible, or that dividing it would significantly diminish its value. This exemption applies in all cases where the property is the family home. However, if the compensation is not made in cash, Property Transfer Tax (ITP) will apply, unless the indivisibility is inherent to the asset being divided and the resulting excess allocation is unavoidable, as the Directorate General of Taxation (DGT) has confirmed.
Where several assets are held in co-ownership, the DGT clarifies that indivisibility must be assessed in relation to the assets as a whole, not on an asset-by-asset basis. Accordingly, if the excess allocation can be avoided or reduced by forming lots, that excess will be subject to ITP. It is worth noting that the new Article 232-12.2 of the Catalan Civil Code (CCcat) provides that, at the request of either spouse, a court may consider the jointly owned assets as a whole for the purpose of forming lots and allocating them[1].
If the dissolution of the family home is effected through a judicial ruling, that is, where the agreement on the division of the jointly owned asset forms part of the court-approved separation agreement, Stamp Duty (AJD) will not apply either. However, if the dissolution is formalised before a notary (public deed), Stamp Duty (AJD) will be payable.
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USE OF THE FAMILY HOME: DIFFERENCES BETWEEN SHARED AND SOLE CUSTODY
One of the key issues to address when a couple considers a legal separation or divorce is deciding who stays in the home they have shared up to that point.
As a general rule, the law prioritises agreement between the parties. Spouses or partners are therefore free to decide who will remain in the family home, whether by assigning exclusive use to one of them or by arranging a time-sharing arrangement between them. The parties have full freedom in this regard; however, if they have children in common, that freedom has one important limit: the best interests of the child. Any agreement reached must not be detrimental to their children.
Where no agreement is reached, the court, guided by the need to protect the rights and interests of the children, will generally award use of the home to the parent who has been granted custody of the children for the duration of that custody arrangement. That said, the court may award use of the home to the non-custodial parent if that parent is the spouse most in need of protection in the following circumstances:
a) Where custody is shared or divided between the parents, or where the spouses have no children or their children have reached the age of majority, even if those children are not yet financially independent of their parents.
b) Where, despite awarding use of the family home on the basis of custody, it is foreseeable that the need for accommodation will continue beyond the point at which the children reach the age of majority.
c) Exceptionally, even where there are no minor children, use of the family home may be awarded to the spouse who does not have custody if that spouse is the one most in need of protection and the custodial spouse has sufficient means to meet their own housing needs.
It is also worth noting that the court may even substitute the allocation of the right to use the family home with another property, provided it is suitable for meeting the housing needs of the spouse and their children. In other words, a secondary residence may equally be allocated as a substitute for the main family home.
Where the parties have not reached an agreement, or where there is no separation or divorce settlement agreement and it is the court that has granted the right of use, that right will always be temporary. However, it may be extended at the request of the party who has been granted the right of use. To apply for such an extension, the law sets a specific deadline: the request must be submitted within the 6 months prior to the expiry of the period established by the court.
The law regards the allocation of the right to use the family home as a means of satisfying the child maintenance obligations towards the common children living with the beneficiary, and also as a form of payment of the compensatory benefit.
The party who has been granted the right to use the home should be aware that they will be responsible for paying the ordinary costs of upkeep, maintenance and repair of the property, including routine service charges payable to the residents' community, utility bills, and annually assessed taxes and fees, that is, the council tax bill (IBI).
Once the right of use comes to an end, the spouse who is the owner of the property may recover possession by enforcing the ruling of divorce or legal separation that established the right of use, or the final decision regarding the duration or termination of that right.
