Society

Fake divorce sidesteps home restrictions

(China Daily)
Updated: 2010-05-14 07:20

CHANGSHA - Li Guoliang, 42, is planning to divorce his wife, not to end an unhappy marriage, but to buy a second home even as China's house prices continue to skyrocket.

Li's decision came after the Chinese government imposed restrictions on the purchase of second homes in a bid to curb property speculation.

A divorce could reduce the couple's down payment by 140,000 yuan ($20,505) and mortgage payment by 100,000 yuan, said Li, who is considering buying a 720,000 yuan second home as an investment in Changsha, the capital of Hunan province.

In April, the State Council ordered banks to raise the down payment on the purchase of a second home from a minimum 40 percent to, at least, 50 percent of the property's value, with a mortgage rate no less than 1.1 times the lowest interest rate.

"After we get divorced, my wife will claim our house so that I can apply for a mortgage as a first-time buyer, since I don't have a house in my name. And we will remarry after that," Li said, adding that he got the idea from a real estate agency.

The new regulation allows first-time buyers to pay a minimum 30 percent of the property price, if the apartment is 90 square meters or larger.

Li and his wife are among many couples planning to divorce in order to evade the government's restrictions on second-home purchases.

"Such a 'fake' divorce may save the second-home buyer hundreds of thousands of yuan. So why not do it?" said Chen Ping, a real estate agent in Changsha.

Chen said he had helped many couples apply for preferential mortgages for first-time buyers through the process of a "fake divorce", which was "legitimate and viable, just like reasonable tax avoidance".

Li Yi, a lawyer with Tenghui Law Office in Chongqing Municipality, said: "In the first two weeks after the new rules were introduced, I had 16 clients hoping to secure a favorable loan by getting a divorce."

A staff member at the marriage registration office of the Changsha City Bureau of Civil Administration said: "It's people's choice to get married or divorced. We have no right to interfere."

Although a "fake divorce" does not break any laws, people should be aware of the potential risks, said Feng Kun, a lawyer with the Changsha-based Xiangsheng Law Office.

"What if your spouse changes his or her mind and refuses to remarry? It would be a big blow," he said.

There is also no concept of "fake divorce" in the eyes of the law, he pointed out. Once divorced, the division of property on the divorce agreement is legally binding.

While the divorce ruse appears to have certain benefits, it is widely despised by many, because it violates the traditional Chinese view of marriage.

According to a poll held by the Chongqing Evening News earlier this month, 309 out of 388 citizens who were surveyed said they would not seek a divorce to buy a second home at a reduced rate.

"I won't sacrifice the happiness of my family for a cheaper house. It's not worth it," said Liu Zhiming, a Chongqing resident and the father of a 3-year-old boy.

Liu's opinion was shared by Zhong Xiaowen, who is employed by a State-owned company in Beijing. "The trick desecrates holy marriage," she said.

Xinhua