Whenever marriage is regulated by the Community of Acquests régime (set of rules), it is assumed that almost all of the property brought in by the spouses during the marriage falls into one large ‘estate’. The administrators of this estate (community of property) are the spouses themselves and they jointly administer the goods composing such estate.
In ordinary circumstances, under the Community of Acquests régime everything acquired by the spouses during marriage is deemed to belong to both in equal shares.
Article 1320 of the Civil Code holds that the following will become part of the community:
- all that is acquired by the spouses through their work or profession;
- as a general rule, all earnings (fruits) from property owned by spouses [more info];
However if the property has been transferred (e.g. through donation, inheritance, etc…) to either of the spouses with the express condition that proceeds made out of the use of that property does not become part of the community of acquests, then such money remains property of the spouse and does not enter the community;
- as a general rule, the earnings (fruits) made from property owned by the children become part of the community of acquests. [more info];
- any property which is acquired with money or other property which is already in the community of acquests, even if the property is in the name of only one spouse. [more info];
- property acquired after marriage by the personal property of the spouses. [more info];
- any fortuitous winnings by either of the spouses. [more info];
The law assumes that property held by either of the spouses belongs to the community of acquests, unless the spouse can prove that it is his or her paraphernal property (Article 1322, Civil Code).
Spouses administer all property within the community of acquests jointly and therefore certain acts of minor importance may be performed alone while other acts require the consent of the other spouse. Acts of ordinary administration may be performed by one spouse alone. While acts of extraordinary administration must be performed by spouses together. The law only defines acts of extraordinary administration and therefore anything else is deemed to be ordinary administration.
Acts of extraordinary administration are:
- rights relating to immovable property (selling, purchasing, creating hypothecs, partitioning, special privileges, etc… over immovables) ,
- borrowing or lending of money (except bank deposits),
- very large donations (general rule),
- contracting of suretyship,
- giving of a pledge,
- entering into an unlimited liability partnership or acquiring shares in a limited liability company which are not fully paid,
- transfer of a business and share in commercial partnership (except a public company) and
- settlement in trust of property forming part of the community of acquests and the variation or revocation of the terms of any trust in which any such property has been settled.
However spouses may appoint each other as mandatories (make a power of attorney – ‘prokura’ in Maltese), with regards to acts of extraordinary administration.
Failing to give consent: If one of the spouses fails to give his consent to an act of extraordinary administration the other spouse may apply to the court of voluntary jurisdiction for authorization when the extraordinary act is “is necessary in the interest of the family” (Article 1323(1), Civil Code).
Unilateral Action: Acts which require the consent of both spouses but are performed by one spouse alone may be annulled by the other spouse where such acts relate to the transfer of immovable property. If the unilateral acts relate to movable property then such acts can only be annulled if the transfer was made gratuitously (i.e. transfer something without an obligation to give something back) (Section 1326, Civil Code).
Division of Community of Acquests Following Marriage Breakdown
Following a marriage breakdown the community of acquests will be dissolved. In such case, as a general rule all the assets of the community will be divided 50%-50%, irrespective how much either of the spouses contributed to the community. However if a spouse gives rise to marriage breakdown then such spouse shall forfeit the right to acquire what has been chiefly acquired by the work or industry of the other spouse, amongst other rights forfeited.
Debts that are chargeable on the community are (Article 1327, Civil Code):
- costs relating to assets in the community of acquests,
- expenses relating to the administration of the community,
- expenses and obligations for the needs of the family including those required for raising children,
- obligations contracted by spouses jointly,
- costs relating to ordinary repairs of personal property of either spouse if the fruits of such property are entering into the community of acquests, and
- any civil debt created by each spouse except those debts which have been created by a civil remedy to a wilful offence (e.g. wilful homicide, theft, fraud, etc…)
Debts which are of a personal nature (e.g. debts arising from the failure of a business) will first have to be paid out by the paraphernal property of the spouse giving rise to such a debt. But otherwise the creditor may satisfy their claim with the part of the community which is owned by the spouse giving rise to the claim, i.e. up to 50% of the community. (Article 1329, Civil Code).
When the assets in the community of acquests are insufficient to satisfy the debts which burden it (see Article 1327, above), then the paraphernal property of both spouses may be used to satisfy the debts of the community of acquests (Article 1330, Civil Code).
Advantages of Community of Acquests
- The Community of Acquests régime may create a better environment for the family unit. Family life is all about "give and take". Partners who seek to share all what they acquire during matrimonial life with their spouse may be committing themselves more to the relationship than those who do not. However this is not necessarily the case.
Disadvantages of Community of Acquests
- As a general rule, should the community of acquests terminate, all that is brought into the community will be divided 50%-50%. However it will not be divided equally where it is proved that one spouse gave rise to separation.
- The creditors of either spouse may satisfy their claim through one of the spouse’s share (i.e. u up to 50% of the community) should the paraphernal property of that spouse fails to satisfy such claim. Therefore it could be that through the community of acquests, a portion of the money earned by one spouse are used to satisfy the debts of the other spouse (Article 1329, Civil Code)