Do parents still need to compensate the spouse when they purchase a property for their child in full?

Although the couple’s financial situation is modest, they qualify to purchase a “two-limit” housing unit. During the marriage, the husband’s parents fully funded the purchase of the property, which was subsequently registered in the husband’s name. Attorneys Wang Lijiong and Liu He from Beijing Huaqiang Law Firm represented the wife and successfully secured RMB 200,000 in housing compensation, thereby effectively safeguarding the wife’s lawful rights and interests and earning high praise from her client.

I. Basic Facts of the Case

　　This case is a divorce dispute. The plaintiff and the defendant registered their marriage in 2009 and subsequently had a son, Xiao Ming. During the marriage, they applied, in the family’s name, to purchase a “two-limit” housing unit; however, the property was registered solely in the defendant’s name, and its rental income is collected by the defendant’s parents. Throughout the marriage, the parties experienced ongoing emotional discord over minor domestic matters, leading to prolonged separation and ultimately the breakdown of their relationship. The plaintiff’s claims in the lawsuit include: (1) a judgment granting the divorce; (2) custody of the child, Xiao Ming, to be awarded to the plaintiff, with the defendant required to pay monthly child support in the amount of RMB 2,000; and (3) division of a residential property located in Changping District, Beijing. The defendant agrees to the divorce and there is little dispute regarding the child support; the main point of contention centers on the ownership of the property and the corresponding compensation.

II. Points of Contention

1. Property Ownership and Compensation The plaintiff contends that the property was acquired during the marriage and thus constitutes marital joint property, requesting a 50% share in the division; the defendant asserts that the property was fully funded by her mother and should therefore be regarded as her individual property.
2. Application of Law : The defendant argues that the property purchase occurred before the Civil Code came into effect and therefore the old law should apply [Interpretation (III) of the Supreme People’s Court on Several Issues Concerning the Application of the Marriage Law of the People’s Republic of China]; the plaintiff, however, contends that the marriage continued after the Civil Code came into effect and thus the new law should apply [Interpretation (II) of the Supreme People’s Court on the Application of the Marriage and Family Chapter of the Civil Code of the People’s Republic of China]. The specific provisions are as follows:｜
   [Interpretation of the Supreme People’s Court on Several Issues Concerning the Application of the Marriage Law of the People’s Republic of China (III)] (Former law, now repealed)
   Article 7 Where, after marriage, real property is purchased for a child with funds provided by one of the child’s parents and the property title is registered in the name of that child, such property shall, in accordance with Article 18, Paragraph 3, of the Marriage Law, be deemed a gift solely to that child and thus recognized as the individual property of one spouse.
   [Interpretation (II) of the Supreme People’s Court on the Application of the Marriage and Family Chapter of the Civil Code of the People’s Republic of China] (New Law)
   Article 8 During the subsistence of the marriage, if a house is purchased by the spouses with full funding provided by one spouse’s parents, and the gift contract expressly stipulates that the gift is made solely to that one child, the matter shall be handled in accordance with the terms of the contract. If no such agreement exists, or if the agreement is unclear, then, upon divorce and division of the marital property, the people’s court may rule that the house shall belong to the child of the parent who provided the funds. In doing so, the court shall take into account, in a comprehensive manner, factors such as the duration of the marital life and the circumstances surrounding the conception and raising of any common children, the fault attributable to either party in the divorce, the extent of each party’s contribution to the family, and the prevailing market price of the house at the time of divorce, in order to determine whether the party who acquires the house is required to compensate the other party and, if so, the specific amount of such compensation.

III. Legal Analysis

• Property Ownership The core legal issue is the characterization of the property purchased with funds provided by the parents. The defendant has submitted bank statements, renovation invoices, and other evidence to demonstrate that the defendant’s mother fully funded the purchase of the property. Where it is established that the defendant’s mother made the full payment, a dispute arises as to whether the new law or the old law should apply. According to Article 1, Paragraph 3, of the “Several Provisions of the Supreme People’s Court on the Temporal Effect of the Application of the Civil Code of the People’s Republic of China,” where a legal fact that arose before the Civil Code came into effect continues after its entry into force, and the civil dispute arising from such a legal fact is subject to the provisions of the Civil Code, unless otherwise provided by law or judicial interpretation. If the old law applies, the property is deemed the personal property of the defendant; if the new law applies, it is deemed marital joint property. Since the marriage continued after the Civil Code came into effect, the new law applies.
• Compensation amount The court, in its discretion, awarded compensation in the amount of RMB 200,000, which amounts to approximately 10% of the property’s market value. The comprehensive factors considered in making this discretionary determination include the fact that the parties have lived together for more than ten years, have jointly raised a child, and that the property is a price-limited commodity housing unit (for which applications are made on a household basis), thereby upholding the principle of fairness.

IV. Judgment Result

1. Permission for divorce : The plaintiff and the defendant are divorced.
2. Child support : The minor child, Xiaoming, shall be raised by the plaintiff; starting from the month following the date of the judgment, the defendant shall pay monthly child support in the amount of RMB 1,200 until the child reaches the age of eighteen.
3. Visitation rights The defendant shall be entitled to visit the child once every two weeks (for two days each time), and the plaintiff shall provide assistance.
4. Property Ownership : The property involved in the case shall be owned by the defendant, and the defendant shall pay the plaintiff compensation in the amount of RMB 200,000.

V. Legal Advice

• The Advantageous Effect of Evidence In disputes over real estate contributions, particularly when parents also contribute, it is crucial to retain evidence of one’s own contribution, the spouse’s contribution, and any transfers made to the spouse’s parents. Where no gift agreement has been executed regarding the nature of the parents’ contribution, subsequent evidence in the form of audio recordings, WeChat messages, or other objectively verifiable records can be used to strengthen the determination of the contribution’s nature, thereby minimizing the risk of future disputes over its characterization.
• Priority of Legal Application : Due to changes in the law, there may be inconsistencies between old and new statutory provisions. A thorough understanding of the applicable law is therefore essential for identifying the core issues in dispute, tailoring evidence preparation to address those issues, and maximizing one’s interests.