The other day, I talked about marriage and how China’s housing market has been effected by recent trends. An even hotter topic these days, however, is divorce, or to be more specific, what happens to all those assets when the marriage is over.
There is still a huge amount of talk out there about the 3rd Judicial Interpretation to the Marriage Law, issued by the Supreme People’s Court (SPC) last Friday. This has been pored over in great detail and been debated for months (a lot is at stake for families, after all), but the most attention seems to be focused on acquisition and disposition of real property.
No big surprise there. As I discussed a couple days ago, the ownership of major assets is the underpinning of marriage in China today. Couples that get hitched without a home or car and an expensive ceremony are referred to as entering into a “naked marriage,” which is definitely a pejorative term.
OK, so let’s get into the details. Consider a few different scenarios and how the new Judicial Interpretation would handle disposition of marriage assets in the absence of an agreement between the parties:
1. Groom’s parents buy house, which is put in his name.
The SPC tells us that the husband gets the house under these circumstances. (I’ll get back to why this has caused an uproar in a minute.)
2. Groom’s parents make down payment, house is in his name, and husband makes payments “from his own funds.”
Again, the husband will get the house upon divorce. You may be asking how the court determines what are his own funds and which are community property. Good question. I consider that to be a huge flaw; there are too many ways for folks to move funds around fraudulently. I also personally believe that once you get marriage, the notion of separate incomes is ridiculous.
3. Groom’s parents make down payment, house is in his name, and payments are made jointly.
Slightly more complicated. The house would go to the husband, but both the value of the joint payments plus a pro rated share of any capital gain would go to the wife.
With me so far? The attempt of the SPC here is to apportion value based on which party (or their parents) put in the money. There are many other fact patterns I could throw out here, but the three above give you the general idea.
Now, why has this freaked out so many people, particularly women, and is the criticism fair?
The system confirmed by the SPC certainly seems neutral at first glance, and I’ve read many attempts made by (predominantly male) lawyers to defend it. But ultimately I think they’re wrong, and the SPC is not living in the real world.
As the debate over “naked marriages” illustrates, the ownership of major assets is increasingly the price of marriage these days. In other words, many brides are choosing husbands in part because of their wealth. Whether you think that’s good or bad is another matter.
Why should women care about such assets? Home ownership signals financial stability, or security. Someone who is thinking about starting a family wants to know that there is a stable platform upon which to build. Makes sense.
But what is the expectation after the couple get married? Here’s what could happen under the new rules:
1. Couple meets. She is impressed by the size of his . . . assets.
2. They get married.
3. Feeling secure because of those assets, they have a child.
4. Several years later, things go sideways and they get a divorce. Husband retains ownership of the house.
Hey, it’s fair. He paid for it, right? Well, let’s see. Do you still think it’s fair if the wife sacrificed her career for the marriage, devoted a great deal of time doing (uncompensated) domestic work, and is now X years older, single again and homeless?
Some have said that the new rules are geared towards mistresses. Indeed. Under the above fact pattern, that husband can walk away from his marriage with his assets and marry his (probably much younger) mistress, in essence casting away the older wife with a limited financial penalty.
I can understand why women are pissed off. They perform their intensive due diligence on a potential husband, ensuring that he is loaded and has a nice home, but then it turns out that she won’t be able to hold onto that asset anyway. What’s the point, then?
To add insult to injury, the system is not set up to accommodate spouses looking to avoid trouble. For example, let’s say a nice couple reads about all this and says, “You know, the house is in my name only. Let’s add yours to it as well and make it community property.” Great! But oops, if they are still paying off a mortgage, they can’t make that change until the note is paid off. Not a very user friendly system.
There is an easy fix to all this of course, and it’s called a contract. The Judicial Interpretation allows the spouses to proactively dispose of assets by agreement. On the other hand, do we really want all marriages to begin with the inherent cynicism of a pre-nuptial agreement? Kind of a buzzkill, if you ask me.
So what are we left with? A new set of rules that look fair but in reality favour men (and their mistresses) and make it more likely that wives will be left in the lurch. The SPC either doesn’t understand why homes are so important to potential brides or they purposely discounted those concerns. Either way, these judges need some gender discrimination sensitivity training.