Supreme Court: Property Acquired During Marriage With One Spouse’s Personal Funds May Remain That Spouse’s Separate Property
⚖️ Ukraine | Family Disputes | Division of Marital Property
Case Details
Case No.: 711/2302/18
Proceedings No.: 61-13953св19
Court: Supreme Court, First Judicial Chamber of the Civil Cassation Court
Decision Date: 22 January 2020
Case Category: Family Law
Subject Matter: Separate Property of One Spouse
Sub-Subject: Property Purchased During Marriage With Personal Funds
Property in Dispute: Apartment
Marriage Period: 1988–2017
Disputed Apartment Purchased: June 2003
Outcome: Apartment recognised as the claimant’s separate private property
Background of the Dispute
The case concerned an important qualification to the general presumption that property acquired during marriage belongs jointly to both spouses.
The parties had been married from 1988 until 2017.
During the marriage, an apartment was purchased in June 2003. The claimant subsequently sought a declaration that this apartment was his separate private property, rather than part of the spouses’ joint marital property.
Although the apartment had been purchased during the marriage, the claimant argued that it had been acquired entirely with his personal funds derived from property that already belonged to him personally.
The dispute therefore raised a central question:
Is the fact that an apartment was purchased during marriage sufficient, by itself, to make it joint marital property?
The Supreme Court held that it is not.
Where Did the Money Used to Buy the Apartment Come From?
The source of the purchase funds was central to the case.
In 1997, another apartment had been privatised by the claimant together with his mother and father. As a result of that privatisation, the claimant personally owned a 1/3 share of that apartment.
In March 2003, the claimant’s mother, acting both on his behalf and on her own behalf, entered into an exchange transaction.
Under that transaction:
the claimant exchanged his personally owned 1/3 share in the apartment;
his mother exchanged her own 1/3 share;
they received another apartment belonging to the claimant’s father; and
the exchange was completed without any additional payment.
In June 2003, that apartment was sold for UAH 29,150.
On the same day, a purchase agreement was concluded for the apartment that later became the subject of the marital property dispute.
The purchase price of the new apartment was UAH 28,300.
All of the relevant agreements were notarised.
The claimant therefore argued that the disputed apartment had effectively been purchased using the proceeds of property belonging to him personally.
The General Presumption: Property Acquired During Marriage Is Joint
The Supreme Court referred to the legal presumption under Ukrainian family law that property acquired by spouses during marriage belongs to them under the regime of joint marital ownership.
However, that presumption is rebuttable.
The Court explained that the burden of proving circumstances capable of rebutting the presumption rests on the spouse who claims that the property is not joint.
Determining whether property is joint therefore requires consideration of factors including:
when the property was acquired; and
the source of the funds used to acquire it.
The date of acquisition is important, but it is not the only relevant consideration.
Acquisition During Marriage Is Not Conclusive
The Supreme Court confirmed the key principle underlying the dispute:
The mere fact that property was acquired during marriage is not an unconditional basis for treating it as the spouses’ joint marital property.
If property is purchased during marriage using the personal funds of one spouse, it may constitute the separate private property of that spouse.
The source of acquisition therefore matters alongside the timing of acquisition.
This distinction was decisive in the present case.
Personal Funds Can Preserve the Separate Character of Property
The Supreme Court agreed with the appellate court that the evidence established a chain connecting the disputed apartment with property that had belonged personally to the claimant.
The claimant had acquired his original property rights through privatisation.
Those personal property rights were subsequently involved in the exchange transaction.
The resulting apartment was then sold.
On the same day, the disputed apartment was purchased.
The appellate court found that the disputed apartment had therefore been acquired with the claimant’s personal funds, rather than through the spouses’ joint efforts or joint labour.
Accordingly, the property retained a separate character despite having been purchased while the parties were married.
The Source of Funds Can Be as Important as the Date of Purchase
This case illustrates an important distinction in Ukrainian marital property disputes.
A court considering whether an asset is joint property should not stop after establishing that the purchase occurred during the marriage.
The analysis may also require tracing how the acquisition was financed.
Where the funds came from property that was already the separate property of one spouse, the resulting asset may itself constitute that spouse’s separate property.
The evidential chain between the original personal asset and the subsequent acquisition can therefore become critical.
The Claimant Rebutted the Presumption of Joint Ownership
The Supreme Court agreed with the appellate court that the claimant had successfully rebutted the presumption of joint marital ownership.
The evidence established that the disputed apartment had been acquired using funds originating from his personal property.
The apartment was therefore not regarded as having been created through the spouses’ joint efforts or joint labour.
The claimant was consequently recognised as its sole owner.
The Supreme Court’s Decision
On 22 January 2020, the Supreme Court substantially upheld the decision of the Cherkasy Court of Appeal dated 18 June 2019.
The appellate court had recognised the disputed apartment as the claimant’s separate private property.
The Supreme Court changed the appellate judgment only in relation to the allocation of court costs. The remainder of the decision was left unchanged.
Accordingly, the substantive conclusion that the apartment belonged exclusively to the claimant remained in force.
Why This Decision Matters
1. Marriage does not automatically determine ownership
The fact that an apartment was purchased while the parties were married creates an important presumption, but it does not necessarily determine the final legal classification of the property.
2. The source of purchase funds can be decisive
A court may examine whether the acquisition was financed from joint marital funds or from assets belonging personally to one spouse.
3. The presumption of joint ownership can be rebutted
The spouse claiming separate ownership bears the burden of establishing facts sufficient to rebut the ordinary marital-property presumption.
4. Property tracing can determine the outcome
Where one personal asset is sold or exchanged and its value is subsequently used to acquire another asset, documentary evidence tracing that sequence can become central to the case.
5. Transaction documents matter
Privatisation documents, exchange agreements, sale agreements, purchase contracts and their dates may collectively demonstrate the source of funds used to acquire disputed property.
Lions Lawyers’ Analysis
This decision is particularly relevant to disputes in which the formal acquisition date appears to favour one conclusion, while the economic source of the acquisition points to another.
An apartment purchased during a 20- or 30-year marriage may initially appear to be straightforward joint marital property. But the analysis can change materially if one spouse can establish that the purchase price originated from property that belonged to that spouse personally.
The practical issue therefore becomes one of asset tracing.
In this case, the sequence of transactions was especially important: personal ownership arising from privatisation, an exchange transaction, the subsequent sale of property, and the purchase of the disputed apartment on the same day.
For similar disputes, the legal strategy should therefore examine not only the title to the disputed property but the entire chain by which the purchase funds were generated.
The decision also illustrates the distinction between a presumption and an irrebuttable rule. Ukrainian law starts from joint ownership of property acquired during marriage, but the spouse asserting separate ownership may overcome that presumption with sufficient evidence concerning the nature and source of the acquisition.
Lions Lawyers advises clients on family and property disputes in Ukraine, including division of marital property, separate property claims, tracing of personal funds, ownership disputes between spouses, real estate and cross-border family matters. We provide full-service legal representation as well as standalone legal opinions, enabling clients to assess their existing strategy and, where appropriate, identify alternative legal approaches.
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