Simulating Divorce as a Means to Secure the Right to Use the Family Home in Case of an Order for Sale

Studiu publicat în volumul In Honorem Flavius Antoniu Baias. Aparența în drept, tomul II, Ed. Hamangiu, București, 2021, p. 837-844.

Introduction

This dissertation is based on the following hypothesis: Two spouses named Mr X and Mrs Y are married with a joint property agreement. They have two children (aged two and three) and live in a home owned exclusively by Mrs Y. Mrs Y runs a business on a freelance basis and, due to the disastrous outlook of her business and the huge amount of debt she is incurring, she and her husband decide to simulate a contested divorce in order to seek application of Article 96 of the Spanish Civil Code (hereinafter, CC) so as to temporarily secure use of the family home in case an order for sale were to be imposed. In the divorce decree, the Judge grants the guardianship and custody of the children to Mr X, along with use of the family home as their guardian (art. 96 CC). Said use is recorded in the Property Registry. Nevertheless, Mrs Y continues to live in the home. In principle, if an order for sale were to be imposed on the family home, the third party to whom it were sold in a public auction (the awardee) would be required to bear the burden of the right to use said home recorded in the Property Registry. Therefore, the question would be whether said recorded right of use can be claimed against third parties when the legal act upon which it is based (in this case, divorce) is merely simulated.

§1. Definition of family home

The Spanish Civil code (CC.) does not contain a specific definition of the term family home. Instead, reference is made to the concept using various expressions: “family home” (art. 1320 CC); „usual home of the family” (art. 90 and 1357 CC); and “usual home of the spouses” (art. 1321 and 1406 CC). This lack of legal specification strikes a contrast with the countless definitions of family home found in the case law. Merely by way of example, the Spanish Supreme Court^[1] handed down a judgement on 16 December 1996 defining the family home as “the sanctuary where the natural person settles and develops, this being the elementary refuge for the satisfaction of their primary needs (rest, nourishment, clothing, etc.) and the protection of their privacy; when there are children, it is also indispensable for the protection and education thereof”^[2].

Unlike the concept of family home, art. 40 I of the CC does define the residence of natural persons in relation to the exercise of their rights and fulfilment of obligations, the definition being “their usual place of abode and, where applicable, that specified in the [Spanish] Criminal Procedure Act”. There is an elementary difference between the two concepts in the sense that whilst the residence serves an ad extra purpose expressed in relations with third parties, the role of the family home is ad intra as it constitutes the place where the family develops its coexistence^[3]. Nevertheless, such a difference does not mean that there is no link between the spousal residence and the family home, with the latter being the physical base of the residence established by the spouses^[4].

Moving back to the definition of family home, it is important to highlight three essential traits that characterise it.

Firstly, it must be a home. In this regard, it is important to note that whereas in the vast majority of cases the home is a real estate property, there is no reason to prevent it from being an inhabitable moveable property such as a caravan, a boat or a living wagon^[5]. This does not mean to say that any living space can be a home. For instance, those that are under construction and, of course, plots of land are excluded, even if they are intended to become the heart of family life^[6]. Similarly, a business venue is not considered a home, although it may be annexed to one, unless the venue is defined as being multi-purpose such that it regularly accommodates both the coexistence of the family group and the development of a profession or trade by one or both spouses^[7]. Furthermore, if the business has closed and the venue is no longer intended for commercial use, the concept of home extends to all of it^[8]. Lastly, the concept of family home does not include storerooms or parking facilities, unless they are annexed to the home, as is the case with houses that contain these elements and apartments under the horizontal property regime which have a parking space and/or storeroom in the basement or on the top floor but are registered as a single property in the Property Registry^[9].

Secondly, in relation to the matter at hand, the term “family” can only be used to describe homes which are characterised as usual, i.e. those in which the family unit coexists on a stable and permanent basis which constitute “their usual shelter or accommodation”^[10]. Considering this requirement, most of the case law excludes second homes from the concept of family home as regards art. 96 CC on the basis that they do not cater for the most basic family needs of protection, without prejudice to any agreements the spouses may reach or to the use of such homes being allocated by legal assignment^[11]. In other words, second homes, whether they are unused or used for seasonal or leisure purposes, are not included in the concept of family home as they do not constitute the usual home of the family and, therefore, they are not the main centre of the interests of the family group^[12]. Nonetheless, there is no shortage of judgements in which the Spanish courts diminish the importance of the concept of usualness. For example, the judgement of the Provincial Court of Murcia of 2 June 2003 classed as a family home a property which is used only for holiday purposes within a marital crisis procedure in which decisions were made concerning the use of the property pursuant to art. 96 CC. Conversely, Cuena Casas states that the rules of protection of the family home seek “to prevent the family from being left without a home, rather than to protect all of the homes of the family”; in other words, such rules are to be applied solely to the home in which the need for protection occurs, i.e. the home that is the main dwelling of the family, the place containing the spousal residence, which is not the case of temporary or holiday homes or homes in which only certain members of the family usually reside^[13]. A home will not cease to be considered a family home when it no longer constitutes the usual residence of either or both spouses on a temporary basis, unless the reason is a mere whim or convenience^[14]. An uninhabited home will not be considered the usual home, even if it is intended to be occupied, given that it has not been used as the usual residence of the family group^[15]. To conclude in relation to the usualness of the family home, it is important to clarify that there is no requirement as to the minimum period of time during which the property needs to have been inhabited; the intention of permanence suffices for the rules on the protection of the family home to be applied^[16].

Thirdly and finally, it is to be considered whether certain minimum conditions of habitability need to be met for a home to be classed as the family home. The Provincial Court of Burgos deemed so in its judgement of 30 June 2006, refusing to class a series of properties as family homes pursuant to art. 96 CC on the basis that they lacked minimum conditions of habitability^[17]. The Supreme Court (Criminal Chamber) ruled otherwise in its judgement of 19 May 1999, where it classed a building in ruins as a family home. Along this line, Martín Meléndez considers that the concept of family home should not exclude properties that fail to meet certain minimum conditions of habitability when said properties provide shelter for the persons involved^[18]. In fact, Serrano Castro argues that if the physical conditions of the home are taken into account when assessing whether it is a family home, some family groups would be excluded from the protection granted by the legal system due to their financial situation^[19].

In light of the above, we can conclude this chapter by highlighting the evident judicial insecurity caused by the lack of definition of the concept of family home in Spanish Law. This uncertainty leads not only to discrepancies in the decisions reached by Spanish courts, but also to undesired consequences in judicial affairs, taking into account the importance of the legal regime concerning the family home vis-à-vis third parties, fundamentally in the interpretation of Article 1320 CC.

§2. Judicial protection of the family home in situations of marital crisis: allocation of use of the family home

There are various rules regarding protection of the family home dotted throughout the Spanish legal system which arise from the requirement to protect the home set out in the Spanish Constitution. This requirement is two-fold since it stems both from the nature of the home itself and from the purpose for which it is intended^[20] (. In other words, the Spanish Constitution protects the family home both directly, by virtue of the right to a decent and suitable home (art. 47) as the guiding principle of social and economic policy, and indirectly, as the home is a means of securing the protection of the family, as required in art. 18.1, 32, 35.1, 39.1 and 50 of the Constitution, inter alia.

In order to comply with the constitutional mandate of protection of the family home, a great many rules can be found in the various branches of the Spanish legal system. Regarding the matter at hand, those of interest are the rules contained in civil law which perform a constant protective function within the marriage and, more specifically, those which protect the family home in situations of marital crisis.

Article 96 CC governs the allocation of use of the family home in cases of marital crises. Considering the hypothesis upon which this dissertation is based, our interest focusses on cases where the marital crisis involves children. In such situations, art. 96 I CC allocates the use of the family home and items of ordinary use to the children and to the spouse whom they are with, provided there are no settlements between the spouses approved by a Judge stating otherwise.

2.1. Contested separation or divorce and underage children

According to the wording of art. 96 I CC, its application depends on two circumstances: the separation or divorce being contested and the existence of children. However, despite the generic reference to children, Spanish case law peacefully establishes that the rule allocates the use of the family home solely to underage children. For children who are of age (or emancipated), the rule does not recognise their right to use of the family home even if they coexist with their parents^[21]. In this case, when the children are of age, any needs of habitation they may have are to be met not by virtue of art. 96 I CC, but of art. 142 et seq. CC as said needs are included in the maintenance that the parents are required to provide to one another.

In short, Article 96 I CC applies only when there is no settlement and the children are not of age, in which case, by construing articles 81 and 86 CC a sensu contrario, the separation or divorce is to be settled in court, meaning that neither a notary public nor a Court Clerk can decide on the matter of use of the family home when no settlement has been reached in this regard^[22].

2.2. Temporary allocation of use of the family home

Although art. 96 I CC makes no pronouncements on the matter, Spanish case law peacefully accepts that allocation of use of the family home cannot be unlimited in terms of time as it is bound by the principle of temporariness, which gains complete sense considering that the right of use is acknowledged to cover a specific need: to protect the greater interests of underage children. Therefore, once said need is covered, allocation of use is no longer justified.

So, when does this right of use expire? There are two major positions on the matter: on the one hand, expiry of the right of use due to the children coming of age and, on the other hand, expiry due to the children having achieved financial independence. Traditionally, Spanish courts have tended towards the second option^[23], but this tendency which seemed to be consolidated in the case law has been modified lately by the Supreme Court, as shown in its judgement of 5 September 2011, which redirects the right of habitation of the children when they come of age to art. 142 CC, even if they have not yet reached financial independence^[24].

§3. Allocation of use of the family home through simulated divorce

As a starting point, by virtue of the principle of temporal priority (prior in tempore, potior in iure), it can be stated that when the right of use is recorded in the Property Registry it can be raised against a third party who acquires the family home in a public auction arising from a regular order for sale. That said, we will now point out the consequences of simulating divorce as an instrument for allocation of use of the family home.

In the hypothetical circumstance discussed in this dissertation, divorce is clearly a simulated act given that neither spouse wishes to see it through. Instead, they intend to lead others to believe what is, in fact, nothing but a deceitful plan which lacks the required basis. In other words, there is a discrepancy between what the spouses want and what the spouses declare that they want, an intentional discrepancy^[25] with the aim of deceiving the third parties who are chasing the simulators.

The lack of will to see the act through along with the lack of cause results in the (double) nullity of the judicially declared divorce (art. 1261.1 and 3, 1275 and 1276 CC). Consequently, the divorce lacks any kind of effect (quod nullum est, nullum habet effectum) and third parties should proceed as if it did not exist. Therefore, the right of use recorded cannot be raised against the awardee of the family home when the spouses have simulated the divorce upon which the right of use is based.

A simulated act becomes automatically ineffective from the moment it is carried out, although the effects caused by said simulation are to be recorded in a judicial declaration. Consequently, the awardee of the family home will be interested in taking legal action leading the Judge to declare the divorce to be null and bringing the factual situation that is contrary to reality to an end. In other words, the awardee will require a judicial declaration stating that the divorce is null in order to destroy the false appearance created by the simulation and, thus, be able to cancel the record made in the registry concerning the right of use of the home acquired by the awardee in a public auction.

Lastly, it is important to explain that although there is no time limit to take action seeking the declaration of nullity due to simulation of divorce, there is a time limit to take action seeking restitution of the elements given due to the simulation. If this is added to the fact that the Spanish legal system does not allow for action to be taken when the instigator has a legal interest in doing so, we can conclude that once the period of time in which restitution can be sought has ended, the interested party can no longer seek nullity unless they claim a different interest^[26]. In the hypothesis proposed in this dissertation, the awardee could indeed take action seeking the declaration of nullity of the divorce on the basis that they need said judicial pronouncement in order to cancel the record concerning the right of use of the family home acquired in a public auction.

Footnotes

^[1] Unless otherwise specified, the Supreme Court Judgements quoted in this dissertation are handed down by the Civil Chamber.

^[2] In minor case law, the concept of family home is repeatedly defined as “that which constitutes the usual place in which spousal and parent-child relationships take place, that is, the place where family coexistence occurs”. By way of example, see the judgements of the Provincial Court of Madrid dated: 22 June 2012; 10 January 2017; 10 March 2017; 14 March 2017; 24 March 2017; 28 March 2017; 29 March 2017; and 7 April 2017.

^[3] According to Matilda Cuena Casas, the difference between spousal residence and family home lies in the fact that, whilst the former constitutes a legal concept which refers to the „legal base of both spouses” – although there may be other individual residences –, the latter refers to the physical location where the relationships of coexistence of the family group take place – M. Cuena Casas, El régimen jurídico de la vivienda familiar, Tratado de Derecho de la familia, vol. III, Los regímenes económicos matrimoniales (I), 2ª ed., M. Yzquierdo Tolsada, M. Cuena Casas, (dirs.), C.M. Aranzadi, 2017, p. 289.

^[4] M. Cuena Casas, op. cit., p. 289;S.Espiau Espiau, La vivienda familiar en el ordenamiento jurídico civil español, PPU, Barcelona, 1992, p. 292. See the judgement of the Provincial Court of Valencia of 28 February 2011.

^[5] C. Pinto Andrade, La atribución del uso de la vivienda familiar, Bosch, Barcelona, 2011, p. 41, M.T.Martín Meléndez, Criterios de atribución del uso de la vivienda familiar en las crisis matrimoniales (art. 96, P. I, 2 y 3 CC). Teoría y práctica jurisprudencial, Aranzadi, Cizur Menor, 2005, p. 40; J.A. Tamayo Carmona, Juan Antonio, Protección jurídica de la vivienda habitual de la familia y facultades de disposición, Aranzadi, Cizur Menor, 2003, p. 35. See the Supreme Court Judgement (Criminal Chamber) of 19 September 1994, which recognises a caravan as a family home in relation to the inviolability of the place of residence.

^[6] See the judgement of the Provincial Court of Madrid of 22 June 2012.

^[7] V.M. Garrido de Palma, Derecho de la Familia. El matrimonio y su economía. Ascendientes y descendientes. Menores e incapaces. La sucesión mortis causa. El patrimonio, la empresa y la sociedad familiar, Trivium, Madrid, 1993, p. 7; M.T.Martín Meléndez, op. cit., p. 41. When the property is multi-purpose, the principle of segregation applies on a priority basis, meaning it is to be specified whether the areas allocated to the home and those designated for professional activity can be used independently and, if so, they are to be dissociated. Regarding this topic, see the judgement of the Provincial Court of Valencia of 25 January 1994. However, where it is not possible to make such a separation, the accessory principle applies, whereby it is to be decided which of the two uses is prevalent. See the judgement of the Supreme Court of 27 February 2012.

^[8] By way of example, see the judgement of the Provincial Court of Biscay of 29 May 2009, which in the interests of the underage children and the mother as their guardian pursuant to Article 96 CC, granted them the use and enjoyment of the entire property that constitutes the family home, including the ground floor where the spouses had set up a jewellery business which ceased to operate after the couple separated.

^[9] M.T.Martín Meléndez, op. cit., p. 42.

^[10] C. Pinto Andrade, op. cit., p. 44. See also M. Cuena Casas, op. cit., p. 300; V.M. Garrido de Palma, op. cit., p. 8; C. Gil Membrado, La vivienda familiar, Reus, Madrid, 2013, p. 12 and 15; A. Panizo y Romo de Arce, Alberto, El proceso matrimonial. Texto adaptado a la Ley 1/2000, de Enjuiciamiento civil, Colex, Madrid, 2000, p. 199; F. de Asís Serrano Castro, Vivienda familiar y cargas del matrimonio, El Derecho, Madrid, 2010, p. 7. For case law, see the Supreme Court Judgement of 16 December 1996. See also the judgements of the Provincial Court of Ciudad Real of 30 December 1995; Asturias of 16 June 2004; Valencia of 23 July 2008; Seville of 14 June 2011; Madrid of 22 June 2012 and 10 January 2017; and Cadiz of 18 July 2016.

^[11] By way of example, see the judgements of the Provincial Court of Granada of 14 May 2002; Valladolid of 16 April 2004; Castellón of 4 June 2007; and Caceres of 13 April 2011.

^[12] By way of example, see the judgements of the Provincial Court of Valencia of 23 July 2008 and Madrid of 11 June 2012. For literature, see M. Cuena Casas, op. cit., p. 298; V.M. Garrido de Palma, op. cit., p. 8; N. Moralejo Imbernón, Régimen jurídico de la vivienda familiar, El patrimonio familiar, profesional y empresarial. Sus protocolos, M. Garrido Melero, J.M. Fugardo Estivill (coords.), Bosch, Barcelona, 2005, p. 271; N. Moralejo Imbernón, Régimen jurídico de la vivienda familiar, Conflictos en torno a los patrimonios personales y empresariales, M. Garrido Melero, J.M. Fugardo Estivill, Josep María (coords.), vol. II, Bosch, Barcelona, 2010, p. 966.

^[13] M. Cuena Casas, op. cit., p. 301. Along these lines, Castro Serrano states that “it is difficult to speak of several family homes given that there can only be one home as such, this being the one that constitutes the epicentre of the family” (F. de Asis Serrano Castro, op. cit., p. 65).

^[14] M. Cuena Casas, op. cit., p. 302-303, M.P. Álvarez Olalla, Responsabilidad patrimonial en el régimen de separación de bienes, Aranzadi, Cizur Menor, 1995, p. 428. See the Supreme Court Judgement of 12 July 1989.

^[15] In this regard, the judgement of the Provincial Court of Madrid of 22 June 2012 refused to define as the family home a plot of land – even though construction work had begun thereon— and the finished building that was not inhabited by the family group. Nevertheless, some decisions declare quite the opposite, such as the judgement of the Provincial Court of Jaen of 28 April 2005, which pursuant to Article 96 CC granted the wife and children the right to use a property which, despite having been acquired by both spouses to build their family home, was never actually inhabited by the couple due to them growing apart and entering a marital crisis. Along this same line, the Provincial Court of Navarre handed down a judgement on 27 November 1993 in which it declared the family home for the purpose of allocating its use under Article 96 CC to be a property purchased by both spouses in which they had not yet coexisted given that the home where they had developed their personal and family life as a couple with their children had been sold. See also the judgement of the Provincial Court of Malaga of 21 October 2005.

^[16] M.P. Álvarez Olalla, op. cit., p. 425; N. Moralejo Imbernón, op. cit., 2010, p. 965-966; N. Moralejo Imbernón, op. cit., 2005, p. 271. M.L. García de Blas Valentín-Fernández, La vivienda familiar en situaciones de normalidad y crisis, Conflictos en torno a los patrimonios personales y empresariales, M. Garrido Melero, J.M. Fugardo Estivill, (coords.), op. cit., 2010, p. 1073; M.L. García de Blas Valentín-Fernández, La vivienda familiar en situaciones de normalidad y de crisis, El patrimonio familiar, profesional y empresarial. Sus protocolos, M. Garrido Melero, J.M. Fugardo Estivill, (coords.), Bosch, Barcelona, 2005, p. 46. For case law, see the judgement of the Supreme Court of 31 May 2012. The Provincial Court of Murcia decided the opposite in its judgement of 13 June 2003, where it classed as a family home the home inhabited by the family group in the past rather than that inhabited at the time when the marriage was broken, on the basis that the latter was only inhabited for a short period of time.

^[17] In the literature, Pinto Andrade posits that the family home must consist in an inhabitable space, i.e. one that is “susceptible or apt to be inhabited in suitable conditions”, which cannot be said of shacks, huts, houses in ruins or barns (C. Pinto Andrade, op. cit., p. 41-42).

^[18] M.T. Martín Meléndez, op. cit. 40-41.

^[19] F. de Asís Serrano Castro, op. cit., 295-296. The same is upheld by M. Cuena Casas, op. cit., p. 295-296.

^[20] P. Domínguez Martínez, La ejecución hipotecaria y la protección de la vivienda familiar, Vivienda, préstamo y ejecución, M. Espejo Lerdo de Tejada, J.P. Murga Fernández, Juan Pablo (dirs.), Aranzadi, Cizur Menor, 2016, p. 564-565; M.T.Martín Meléndez, op. cit., p. 19.

^[21] Decisions on this matter include the Supreme Court Judgements of 5 September 2011; 29 May 2015; 6 October 2016; 21 December 2016; 23 January 2017; and 14 March 2017.

^[22] J. Feás Costilla, Vivienda familiar y divorcio notarial, Menores y crisis de pareja: la atribución del uso de la vivienda familiar, G. Cerdeira Bravo de Mansilla (dir.), Reus, Madrid, 2017, p. 234.

^[23] See the judgements of the Provincial Court of La Rioja of 26 October 1998; Barcelona of 6 March 2000 and 25 January 2003; Santa Cruz de Tenerife of 10 March 2008; SAP Santa Cruz de Tenerife of 25 January 2010; Valencia of 14 October 2010; and Castellon of 18 February 2011. For related literature, see M.L. García de Blas Valentín-Fernández, op. cit., 2010, p. 1123; M.L. García de Blas Valentín-Fernández, María Luisa, op. cit., 2005, p. 245; C. Gil Membrado, op. cit., p. 101.

^[24] See also the Supreme Court Judgements of 10 February 2006; 11 November 2013; 29 May 2015; 6 October 2016; 21 December 2016; 19 January 2017; 23 January 2017; and 14 March 2017.

^[25] Intentionality in this discrepancy is what makes the difference between simulation and obstative error, “where the discrepancy between declaration and will occurs unknowingly” (M. Albaladejo García, La simulación, Edifosfer, Madrid, 2005, p. 19).

^[26] M. Albaladejo García, op. cit., p. 45.