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New EU Regulation and How Does It Affect Existing and Future Matrimonial Property in Spain?

Matrimonial Property: New European Union Regulation and how does it affect existing and future marriages for those owning property in Spain

A new European Union Regulation will be in force on 29 January 2019 concerning expats of whatever nationality who are habitually resident in Spain. The regulations will be implementing enhanced cooperation in the area of jurisdiction, applicable law and the recognition and enforcement of decisions in matters of matrimonial property regimes.

The new Regulation applies to couples who will get married on or after 29 January 2019, wherever they get married and whatever their nationality. The new Regulation will also be applicable in Spain and by Spanish authorities to spouses of British citizens as the new Regulation although not applicable in the UK, Ireland and Denmark has a universal scope of application for the authorities of any EU Member State. Moreover, Brexit will have no consequence on this, since the UK is already not bound by this EU Regulation.

To understand the nature and effect of this EU Regulation we should start by the concept that that designates its material scope of application: “matrimonial property regimes”. In comparative law the concept of matrimonial property regime is typical of the civil law legal systems, where two main types of regimes can be found in the civil codes: community of property and separation of property. In most civil law countries, a community of property exists between the spouses as the legal matrimonial property regime, unless the spouses choose for the separation of property in a matrimonial property agreement (this is the case in France, Belgium, Italy, Spain, etc.), while the opposite solution is quite less common (Austria, Catalonia, Balearic Islands, etc.). In most common law countries there is no concept of matrimonial property regime, what in practice means that spouses enjoy absolute separation of property during their marriage, although of course we are all aware that on divorce the judge will make a fair distribution of matrimonial assets between the spouses (but this is an effect of divorce rather than the application or consequence of any matrimonial property regime as understood in civil law jurisdictions).

Until now, to determine what law is to be applied in cross-border cases the conflict-of-laws rules in Spain were these: for spouses of common nationality the law of their common nationality is the law to be applied, and in cases of mixed marriages (spouses of different nationalities) the law of the first common habitual residence is to be applied. Therefore, an English married couple buying a house in Spain was considered as subject to an absolute separation of property, while a French married couple buying a house in Spain was considered subject to a community of property, and this situation had to be put in writing by the Spanish notary public in the deed of transfer and at the Land Registry. For mixed couples the situation is more complex since it is necessary to ascertain the jurisdiction where the spouses fixed their common habitual residence immediately after marriage, something that in many cases is not easy. But, if a mixed couple got married in England but where habitually resident in Spain immediately after marriage they had to be considered as subject to Spanish laws, and that means community of property (sociedad de gananciales). Please, note that the place of marriage is of no importance in itself, the rules being common nationality or first habitual common residence. Only in cases of mixed marriages and where it is absolutely impossible to determine the common habitual residence after marriage, the place of marriage is of importance, but as a third rule.

What will change after 29 January 2019? Now the first rule is the place of the first common habitual residence, and the common nationality rule is only applicable when the spouses have not had a first common habitual residence, but most marriages indeed have had a first common habitual residence. Let’s imagine a couple of British nationals who have met in Spain, have gotten married in England, but have established their first common habitual residence in the Spanish city of Fuengirola. Whether they like it or not, and although both spouses are of English nationality, they will be in a community of property regime (sociedad de gananciales), and not in absolute separation of property as used to be the case before the entry into force of this EU Regulation. Of course, for a mixed couple that got married in England but has established its first common habitual residence in Spain the result is the same: community of property. Place of marriage is of no significance in the EU Regulation since even in the case of a mixed couple with no first common habitual residence the applicable law is not the law of the place of marriage, but the law with which the spouses jointly have the “closest connection” at the time of the conclusion of the marriage.

How to avoid a situation of community of property (sociedad de gananciales) if the couple intends to have in Spain their first common habitual residence? Well, the EU Regulation is quite pragmatic in this regard giving to the future spouses or the spouses at any time of their marriage the possibility of a choice of law between the laws of the nationality or the laws of the habitual residence of either of the spouses at the time the agreement to designate the applicable law is concluded. Therefore, if both future spouses or one future spouse is of English nationality they can choose English law as the law applicable to their future matrimonial property regime. Of course, they can also choose Spanish law if Spain is the place of habitual residence of both or either of them at the time of their agreement, and selecting Spanish law they can also choose the possibility of separation of property under the rules of the Spanish Civil Code.

The choice of English law (other EU member states law) or the choice of a separation of property regime under Spanish law, both choices having very similar practical consequences, must be made by means of a matrimonial property agreement (capitulaciones matrimoniales), which to be formally valid in Spain must be done at the notary public if any of the spouses is resident in Spain at the time the agreement is concluded. This means that while in the past there was no need for an agreement on a matrimonial property regime (capitulaciones matrimoniales) by English expatriates living in Spain and intending to get married, whether in England or Spain, now the situation has changed and the matrimonial property agreement made before a notary public seems to be the most rational choice in order to keep things as they used to be before the entry into force of EU Regulation. For mixed couples, actually nothing has changed in the sense that the applicable law continues to be the law of the first common habitual residence, but a written clarification on this is also desirable and, of course, a matrimonial property agreement (capitulaciones matrimoniales) is necessary if the couple wants to avoid the community of property (sociedad de gananciales) and choose a system of separation of property.

In order to fully understand all the practical implications of any matrimonial property agreement or the lack of it, and now that the Regulation entry into force on 29 January 2019, we recommend expats already married couples and future expat married couples to seek proper legal advice from a Spanish lawyer used to deal with complex cross-border issues in the preparation of matrimonial property agreements, thus avoiding the consequences of unexpected legal results under the new European Union rules.

To speak to such a lawyer, arrangements can be made by contacting: myra@citizensadvice.org.es

Please note: The information provided is based upon our understanding of current legislation. It is not legal advice but is provided freely to enable you to be properly informed. We recommend that if you are considering taking action, you should seek professional advice.

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