Lack of Agreement of a Co-Owner for the Disposal of Real Estate is the Reason for the Recognition of Deal as Invalid – the SC Grand Chamber

The principle of the rule of law provides the legal certainty, particularly while solving the issue on the necessity to derogate from the opinion on the application of a legal norm in similar relations. The Grand Chamber of the Supreme Court derogated from the opinions of the Supreme Court of Ukraine regarding the application of legal norms in similar legal relations set forth in the Resolutions in the case No. 6-1622цс15 of 7 October 2015, in the case No. 6-1912цс15 of 27 January 2016 and in the case No. 533цс16 of 30 March 2016, since these opinions contradict to the principle of equality of proprietary rights of a married couple, as well as the equality of rights of co-owners to common property without the determination of parts.

The legal position of the SC Grand Chamber consists of the fact that the lack of notarized agreement of a co-owner (the second one amongst a marriage couple) to conclude a mortgage contract deprives the other co-owner, who has made a deal, from the necessary authority for the disposal of common property. The conclusion of such a contract testifies the violation of its form, and pursuant to Part 4 of Article 369, Article 215 of the Civil Code of Ukraine, it provides the other co-owner with the right to appeal the contract on the grounds of its invalidity. Herewith, the law does not link the presence or lack of the agreement of all co-owners to conclude the agreement neither with the good faith of one of the marriage couple, who has concluded the agreement as for common property, nor with the good faith of the third entity – the counteragent under this agreement, nor raises the question on appealing the contract depending on the good faith of the contractual parties.

Courts of previous instances found that the disputed apartment had been acquired by the defendant during marriage with the claimant and was common property of the marriage couple. The defendant and the third person, who does not make separate claims, concluded a loan contract, according to which the last one gave monetary assets to the defendant; to ensure the fulfillment of the obligation under the noted contract, they concluded mortgage contract, pursuant to which the disputed apartment was transferred for mortgage.

Pursuant to Article 578 of the Civil Code of Ukraine and Article 6 of the Law of Ukraine No. 898-IV of 5 June 2003 “On Mortgage”, while concluding a mortgage contract, commonly owned property may be transferred for mortgage only at notarized agreement of all co-owners; thus, notarized agreement of the claimant, as the property co-owner, was obligatory. However, she did not give her consent for this. A co-owner may transfer his/her part of property for mortgage without the agreement of other co-owners, if such part is allocated in-kind and proprietary right to it, as a separate object of real estate, is registered.

A marriage breakdown shall not lead to the change of legal status of the couple’s property. Such property shall continue being their common joint belonging. The disposal of property, which is the object of the right to common joint belonging after the marriage breakdown, shall be exercised by co-owners only at mutual agreement, pursuant to the Civil Code of Ukraine.

Since the noted property acquired by the couple while their marriage belongs to wife and husband according to the right to common joint property pursuant to Article 60 of the Family Code of Ukraine and the noted circumstance has not been refuted, the appealed mortgage contract is not valid, pursuant to Articles 203, 205, 215 of the Civil Code of Ukraine.

Follow the link http://www.reyestr.court.gov.ua/Review/78215412 to see the full text of the Resolution of the Grand Chamber of the Supreme Court of 21 November 2018 in the case No. 372/504/17 (proceedings No. 14-325цс18).