Property Relations upon Divorce

Upon divorce, the property relations between the spouses depend primarily on which property regime applies to the marriage: the statutory community regime, the statutory separation regime, or a contractual regime (prenuptial/marriage contract) – Article 18, paragraph 1 of the Family Code (FC). The regime may also be changed during the marriage – Article 18, paragraph 4 of the FC. Marriage contracts and the applicable statutory regime are entered in a central electronic register kept by the Registry Agency – Article 19, paragraph 1 of the FC.

1. If the statutory community regime applies between the spouses

This is the regime that applies by operation of law when the spouses have not chosen another regime – Article 18, paragraph 2 of the FC.

Under this regime, the marital property community terminates upon termination of the marriage – Article 27, paragraph 1 of the FC. Until the divorce, the common property is managed jointly, and dispositions of common property are, as a rule, made by both spouses together – Article 24, paragraph 3 of the FC. Neither spouse may dispose of their future share in the community during the marriage – Article 24, paragraph 1 of the FC.

After the divorce, the basic rule is that the spouses’ shares are equal. This has been consistently accepted in case law, for example in Decision No. 60147 of 15 December 2021 of the Supreme Court of Cassation in civil case No. 1102/2021, First Civil Division, Civil Collegium, rapporteur Judge Bonka Decheva, which holds that the equality of shares follows from the statutory presumption of joint contribution.

However, the law allows deviation from this equality in two main hypotheses:

• when one of the spouses has been awarded the exercise of parental rights in respect of the minor children and this creates particular difficulties for that spouse, the court may award them a larger share of the common property – Article 29, paragraph 1 of the FC;
• when the contribution of one spouse to the acquisition significantly exceeds the contribution of the other, the court may award them a larger share – Article 29, paragraph 3 of the FC.

In addition, the spouse who has been awarded parental rights receives, outside their share, the movable property intended for the upbringing and education of the children – Article 29, paragraph 2 of the FC.

2. Claim for a share of the value of specific property of the other spouse

In addition to the division of the common property, upon divorce each spouse may claim a share of the value of:

• items used for the exercise of a profession or craft;
• receivables of the other spouse,

if they were acquired during the marriage, are of significant value, and there was a contribution to their acquisition through labour, funds, care of the children, or work in the household – Article 30, paragraph 1 of the FC.

This right is particularly important when the respective assets do not fall directly within the marital property community, but were in reality accumulated through joint contribution.

3. If the statutory separation regime applies between the spouses

Under the statutory separation regime, everything that each spouse acquires during the marriage is their personal property – Article 33, paragraph 1 of the FC. This means that upon divorce there is no division of a “common property mass” under the rules of the marital property community.

Nevertheless, the law protects the contribution of the other spouse: upon termination of the marriage by court action, each spouse is entitled to receive a share of the value of what the other acquired during the marriage, to the extent that they contributed through labour, funds, care of the children, work in the household, or in any other way – Article 33, paragraph 2 of the FC. In other words, under separation there is no automatic co-ownership, but there is a compensatory mechanism.

4. If there is a marriage contract

The spouses may regulate their property relations by a marriage contract both before the marriage and during the marriage – Article 37, paragraphs 1 and 3 of the FC. In it they may agree on matters such as:

• rights over property acquired during the marriage;
• rights over property owned before the marriage;
• management and disposition of property, including the family home;
• participation in expenses and liabilities;
• the property consequences of divorce;
• maintenance between the spouses;
• maintenance of the children;
• other property relations, provided they do not contradict the Family Code – Article 38, paragraph 1 of the FC.

For matters not regulated in the marriage contract, the statutory community regime applies.

5. Agreement upon divorce by mutual consent

Upon divorce by mutual consent, the spouses are obliged to submit an agreement concerning the children, the family home, maintenance between the spouses, and the family name – Article 51, paragraph 1 of the FC. They may also agree on other consequences of the divorce, including property matters.

This means that upon divorce by mutual consent the property relations may be settled voluntarily and contractually, instead of later conducting separate proceedings for shares, partition, or monetary claims.

6. The family home after divorce

Property relations upon divorce almost always also affect the use of the family home. If the divorce judgment awards the use of the home to one of the spouses, a tenancy relationship arises by virtue of the court judgment itself – Article 57, paragraph 1 of the FC. The court may also determine rent; no rent is due for the residential area used by the minor children – Article 57, paragraph 2 of the FC.

This is not ownership, but a regulation of use; however, in practice it has significant property consequences.

7. Personal property of the spouses

Not everything owned by the spouses is subject to division. Each spouse may dispose of their personal property. In disputes the question often arises whether a particular item is common or personal.

Case law accepts that if a particular immovable property was acquired during the marriage with the personal funds of one spouse, full or partial transformation of personal property may be established. This has been confirmed, for example, in Interpretative Decision No. 5 of 29 December 2014 of the Supreme Court of Cassation in interpretative case No. 5/2013, General Assembly of the Civil and Commercial Collegiums, rapporteur Judge Maria Ivanova, as well as in Ruling No. 1376 of 2 December 2015 of the Supreme Court of Cassation in civil case No. 4781/2015, Fourth Civil Division, Civil Collegium, rapporteur Judge Margarita Georgieva. In practical terms this means that upon divorce it is first clarified which property falls within the community at all, and only then is partition or determination of shares proceeded with.

8. Pre-existing marriages

For marriages concluded before the entry into force of the current Family Code, the rules on property relations also apply to property acquired under pre-existing marriages – § 4, paragraph 1 of the FC. These spouses may choose the separation regime or conclude a marriage contract.

9. International element

If the spouses have different nationalities, live in different countries, or have property in more than one country, it is necessary to determine which law governs their property relations.

Under Bulgarian private international law, the property relations between spouses are governed by the law applicable to their personal relations – Article 79, paragraph 3 of the Code of Private International Law (CPIL). The spouses may choose the applicable law for their property relations if this is permitted – Article 79, paragraph 4 of the CPIL.

When EU law is applicable, Regulation (EU) 2016/1103 is of particular importance. It allows the spouses to choose the applicable law from among the law of the State of the habitual residence or of the nationality of either of them – Article 22 of Regulation (EU) 2016/1103. In the absence of a choice, as a rule the law of the State of the first common habitual residence after the marriage applies – Article 26(1)(a) of Regulation (EU) 2016/1103. This law governs, inter alia, the classification of property, liability for debts, the termination of the regime, and the division of property – Article 27 of Regulation (EU) 2016/1103.

It is also important that the applicable law under the Regulation applies to all assets, regardless of where they are located – Article 21 of Regulation (EU) 2016/1103.

10. Practical conclusion

Upon divorce, “property relations” most often cover the following questions:

• which property is common and which is personal;
• what the applicable property regime is;
• whether the shares are equal or there are grounds for a larger share;
• whether one spouse is entitled to monetary compensation for contribution;
• what happens to the family home;
• whether there is a marriage contract or an agreement upon divorce;
• whether there is an international element and which law applies.

As the subject matter is complex, attorney Nikola Arabadzhiev would help you orient yourself quickly and easily regarding the legal consequences.