Marital Property Regimes: Community Property, Separation of Assets, and Liquidation

Marital Property Regimes in Spain: Complete Guide

The marital property regime determines how assets and debts are managed during marriage and, crucially, what happens to the estate when the marriage is dissolved. In Spain, the main regulation is found in the Civil Code (Arts. 1315-1444), although autonomous communities with their own foral law (Catalonia, Aragon, Navarre, Basque Country, Balearic Islands, and Galicia) have different regimes.

The Three Regimes Under the Civil Code

The Spanish Civil Code contemplates three marital property regimes:

1. Community property (gananciales) (Arts. 1344-1410 CC): This is the default regime in common law regions. Gains and benefits obtained during the marriage belong to both spouses jointly.

1. Separation of assets (Arts. 1435-1444 CC): Each spouse retains ownership, enjoyment, administration, and free disposal of their assets. This is the default regime in Catalonia, the Balearic Islands, and Valencia.

1. Participation regime (Arts. 1411-1434 CC): Each spouse acquires the right to participate in the gains obtained by the other during the marriage, but settlement only occurs when the regime ends. It is rarely used in practice.

Community Property: The Most Common Regime

Community property is the default legal regime in common law regions (Madrid, Andalusia, Castile and Leon, Extremadura, etc.). It begins at the time of marriage (or when agreed upon) and dissolves upon divorce, legal separation, annulment, death, or agreement between spouses through marital agreements.

#### Community vs. Private Property

Art. 1347 CC lists community property:

• Assets obtained through the work or industry of either spouse.
• Fruits, income, and interest produced by both private and community assets.
• Assets acquired for consideration using community funds.
• Assets acquired through community right of first refusal.
• Businesses and establishments founded during the community regime with community funds.

Private property (Art. 1346 CC) includes:

• Assets each spouse owned before marriage.
• Assets acquired by gift (inheritance, donation) during marriage.
• Assets acquired with or in substitution of private property.
• Rights and assets inherent to the person (moral copyright, personal injury compensation).
• Tools and instruments necessary for professional practice.

#### Debts in Community Property

The distinction between community and private debts is essential:

• Community debts (Art. 1362 CC): Those incurred in the ordinary exercise of a profession, in the administration of community property, for marriage expenses, and for the support and education of children.
• Private debts: Those predating the marriage, those arising from disposition of private property without the other spouse's consent, and those incurred exclusively in one spouse's interest.

Art. 1365 CC establishes that community property directly responds to creditors for debts incurred by a spouse in ordinary domestic management or in the management of community property.

Separation of Assets

Under separation of assets, each spouse maintains ownership, administration, and disposal of their assets (Art. 1437 CC). No common estate is formed.

#### When It Applies

• By express agreement in marital agreements (capitulaciones) (Art. 1326 CC).
• As the default regime in Catalonia (Art. 232-1 of the Catalan Civil Code), the Balearic Islands, and Valencia.
• By court order extinguishing the community property regime.

#### Compensation for Domestic Work (Art. 1438 CC)

Even under separation of assets, the spouse who has worked in the home has the right to compensation when the regime ends. The Supreme Court (STS 26/2019 of May 14) has established that this compensation does not require proving unjust enrichment -- it suffices to demonstrate dedication to the household. The amount is set judicially, considering the duration of the marriage, the other spouse's income, and the intensity of the dedication.

Marital Agreements (Capitulaciones Matrimoniales)

Marital agreements are the legal instrument to choose or modify the property regime, regulated under Arts. 1325 to 1335 CC.

#### Requirements

• Public deed before a notary (Art. 1327 CC).
• May be executed before or during the marriage.
• Must be registered with the Civil Registry (and the Property Registry if they affect real property) to be enforceable against third parties.

#### Changing the Regime During Marriage

Spouses may change regimes at any time through new marital agreements. Art. 1317 CC provides that modifications shall not prejudice rights already acquired by third parties.

Typical scenarios for change:

• From community to separation when one spouse starts a business with financial risk.
• From separation to community when consolidating a joint family estate.
• Forced change by court order (Art. 1393 CC): when one spouse requests dissolution due to the other's mismanagement, seizure of one spouse's share for personal debts, or insolvency proceedings of one spouse.

Liquidation of Community Property

Liquidation is the process of inventory, valuation, debt payment, and división of the remaining estate following dissolution of the community property regime.

#### Process Phases

1. Dissolution: Occurs through divorce, separation, annulment, death, or regime change (Art. 1392 CC).

1. Inventory: An inventory is prepared comprising assets (community property, Art. 1397 CC) and liabilities (community debts, Art. 1398 CC).

1. Valuation: Assets are valued at market value at the time of liquidation (not at acquisition).

1. Debt payment: Community debts are satisfied first from community assets.

1. Reimbursements between estates: If the community estate has paid private debts of a spouse or vice versa, reciprocal credits arise (Arts. 1364, 1397.3, and 1398.3 CC).

1. Division of the estate: The remainder is divided equally between both spouses (Art. 1404 CC).

#### Contentious Liquidation

When there is no agreement, liquidation is processed judicially under Arts. 806 to 811 of the Civil Procedure Act (LEC). The proceeding begins with inventory formation, and any disagreement about inclusión or exclusión of assets is resolved through the procedure under Art. 809 LEC.

Foral Regimes

Each autonomous community with its own foral law has its own rules:

• Catalonia: Separation of assets as default (Book II of the Catalan Civil Code). Supplemented by economic compensation for work (Art. 232-5 CCCat).
• Aragon: Consortium regime (standum est chartae), regulated in the Code of Foral Law of Aragon.
• Navarre: Marital partnership of conquests (Laws 82 to 109 of the Fuero Nuevo).
• Basque Country: Foral communication regime in Bizkaia; separation of assets in Gipuzkoa and Alava.
• Balearic Islands: Separation of assets in Mallorca and Menorca; special regime in Ibiza (espolits).
• Galicia: The default is community property from the Civil Code, but with specific provisions (Law 2/2006 on Galician Civil Law).

How Lexiel Can Help

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Frequently Asked Questions

What regime applies if we did not sign marital agreements?

In common law communities (Madrid, Andalusia, Castile and Leon, etc.), community property applies as the default regime. In Catalonia, the Balearic Islands, and Valencia, separation of assets applies.

Can I change the property regime after getting married?

Yes, at any time, by executing new marital agreements before a notary (public deed). The change does not prejudice third parties with acquired rights (Art. 1317 CC).

What happens with the mortgage if we divorce under community property?

A mortgage taken during the marriage with community funds is a community debt. During liquidation, the outstanding balance is deducted from assets. If one spouse keeps the home, they typically assume the mortgage, which requires novation with the bank.

¿Am I entitled to compensation for domestic work under separation of assets?

Yes, Art. 1438 CC recognizes the right to compensation for the spouse who has worked in the home. The Supreme Court does not require proving unjust enrichment, only dedication to the household (STS 26/2019).

What happens with an inheritance received during a community property marriage?

Assets acquired gratuitously (inheritance, donation) are private property of the receiving spouse (Art. 1346.2 CC), although the fruits or income they produce are community property (Art. 1347.2 CC).

How are assets liquidated when there is disagreement?

Without agreement, the judicial liquidation procedure under Arts. 806 to 811 of the LEC is followed, with inventory formation, valuation, and división of the estate.