Valuation of Mortgaged Real Estate in the Proceedings for the Division of Community Property of Spouses – Remarks De Lege Lata

The problem of determining the value of mortgaged real estate in proceedings for the division of community property of spouses has repeatedly been the subject of analysis by civil law scholars. Over the years, two opposing views have formed in the case law of the Supreme Court as to how to determine the value of mortgaged real estate. The first to emerge and consolidate was the view that encumbrances on real estate, including mortgages securing loans granted to the spouses during the time of holding their community property, are assumed to reduce the value of the real estate. The court, therefore, in determining the value of this item within the community property, takes into account the amount of the debt unpaid (by the date of the decision on property division) by the spouses and, in awarding the property to one of them, reduces the additional payment or repayment to the other accordingly. According to the second view, currently dominant, the court, when establishing the value of real estate constituting a community property of spouses, encumbered with a mortgage securing a loan granted to the spouses, takes into account only its market value, disregarding the encumbrance. It appears, however, that each of the presented methods of determining the value of the mortgaged real estate in the proceedings for the division of community property of the spouses may entail the risk of harming interests of one of the spouses. Thus, in spite of abundant case law and numerous contributions from scholars in the field, this problem is still relevant under the current legislation and requires consideration of legislative change in this area.