Community Property

Probate, Trust and Estate Planning Tidbits.
by John T. Anderson, Chairman
Certified Specialist in Estate Planning, Trust
and Probate Law by the State Bar of California,
Board of Legal Specialization

Community Property

A December 2008 case was referred to recently by Judge Paul.  He mentioned during our Brown Bag Luncheon that Judge Beckloff had cited the case as the most recent appellate court case dealing with the issue of community property.  The case did not involve Family Code §852 issues of transmutation because title was taken, from the outset, in wife’s name alone.  The court, in a footnote, cites Hogoboom and King’s Cal Practice Guide: Family Law.  The decision was written by Justice King.

Michael (“Husband”) and Annikkawa (“Wife”) married in 1997.  A home was purchased in 2000.  Wife took title to the real property in her name alone.  The down payment was from Husband’s earnings.  Husband agreed with the realtor that financing would be easier if the home was in Wife’s name and the Grand Deed and two Deeds of Trust were to Wife, “a single woman.”

Husband remained in the home when Husband and Wife separated.  Prior to Husband filing for divorce, Wife sold the property to ECG.  ECG purchased the property and later, after an Unlawful Detainer action, evicted Husband.  Husband filed for Joinder to bring ECG into the divorce and to set aside the sale. 

Husband testified that he had met with Wife and employees of ECG at the property.  He identified himself as Husband, told them the property was community property, and told them that he wouldn’t sell.  The two employees testified that they only spoke with Wife and that they were never advised the Husband and Wife were married.  Husband’s claims were denied by the Trial Court, which ruled ECG was a bona fide purchaser.  The Trial Court’s decision was affirmed by the Appellate Court.

Transfer of real property title of community property real property requires that both parties join in execution of the deed.  Absent that, the rule is that such a transfer is voidable by the spouse who did not join in the conveyance (Family Code §1102).  However, the deed is presumed valid if received in good faith, without knowledge of a marriage relation [Family Code §1102(c)(2)].

Husband argued that ECG at least knew he was a tenant in possession if not that he had an interest in the property and thus that he had an interest in the property, and thus they had a duty to inquire as to his interest.

The court, in what appears to be dicta, indicates that “there appears to be merit” to Husband’s contentions that ECG is “charged with whatever knowledge it would have acquired” had it made inquiry to Husband.  But the court says it does not have to “reach the issues” because Husband “did not have an interest in the property as a matter of law.”

The court reviews that there is a “form of title” presumption as a matter of public policy citing Marriage of Haines (1995) 33Cal.App.4th 277 and In re Marriage of Broderick (1989) 209 Cal.App.3d 489, codified in Evidence Code §662.  The presumption requires clear and convincing proof to rebut.

Husband argued the fact that the marriage pre-dated the purchase of the property and that the general presumption that property purchased during marriage was community property negates the presumption arising from the form of title.  The court says “the affirmative act of specifying a form of ownership in the conveyance of title “removes the property” from the more general presumption” [In re Marriage of Lucas (1980) 27 Cal.3d 808].

Husband correctly states that legislation was passed superseding Lucas (Family Code §§2581 and 2640); but the court states that those statutes are “unrelated to the analysis and holding we rely on.”  The statutes enacted involved other issues.  Some of those issues involved title held as joint tenancy presumed to be community property and the right to reimbursement for separate property contributions to community property.  In addition, the new statutes involved “division of property on dissolution of marriage or legal separate of the parties.”  This property was not acquired by the parties and it involves a dispute between Husband and ECG.

“To overcome the form of title presumption, the evidence of a contrary agreement or understanding must be ‘clear and convincing’” [Evidence Code §662, In re Marriage of Weaver (1990) 224 Cal.App.3d 478].

The fact that Husband testified that he allowed title to be in Wife’s name alone for financing purposes actually confirms that the vesting in Wife’s name alone was intentional and not inadvertent.

Husband argued that requirements for a valid transmutation were not met; but this argument, the appellate court says, is misplaced because “there are no facts suggesting a transmutation” and the court’s ruling “is not based upon and does not imply a transmutation.”  This was not a case where there was a change in the character of property already owned by the parties.

                _________________________________
                John T. Anderson, Section Chair
                Certified Specialist in Probate, Trust and Estate Planning
                By the California State Bar Board of Legal Specialization

Copyright © 2011 by John T. Anderson

All articles by John T. Anderson may be copied for personal use, only. All articles or outlines from others may be used only with their personal authorization. Any approval is for personal use, only, and for non-commercial purposes.

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