Yes. In a divorce action, courts must divide community property between the parties equally; however, this process may be different when the community property is owned with third parties. When third parties are involved, the proceedings become more complex and require that the court consider the third parties’ existence, interest, and rights when rendering a judgment on the property.
The Family Court’s Jurisdiction
Under Family Code section 750, spouses may hold property as joint tenants or tenants in common, or as community property, or as community property with a right of survivorship, in California. (Fam. Code § 750.) However, for purposes of a divorce proceeding, property acquired during marriage in joint form is presumed to be community property, including property held in joint tenancy or tenancy in common. (Fam. Code § 2851.)
Therefore, before the community’s estate division occurs, the court must determine the character of property as separate, community, or quasi-community property before a division can occur. (Marriage of Whitman (2023) 98 Cal.App.5th 456, 469.)
By definition, “all property, real or personal, wherever situated, acquired by a married person during the marriage while domiciled in [California] is community property.” (Fam. Code § 760.) Thus, a married person’s separate property includes all the property owned before marriage, acquired after marriage through inheritance or as a gift, and the rents or profits generated by such separate property. (Fam. Code § 770.) Lastly, quasi-community property is property that was acquired under the same circumstances as community property but out of state. (Fam. Code § 125 subd. (a)-(b). Accordingly, courts divide quasi-community property in the same manner as community property. (Fam. Code § 2660.)
The family court’s jurisdiction extends only to property within the community estate. Thus, once the property is classified, the court cannot dispose of either spouse’s separate property in the divorce. (Fam. Code § 2650; Porter v. Superior Court (1977) 73 Cal.App.3d 793, 803.)
Property Division
In a divorce action, absent a written agreement or oral stipulation between the parties, the court must divide the community estate equally between the parties. (Fam. Code § 2550.) Courts may, however, treat the spouses’ joint interests different when co-ownership is shared with third parties.
Under Family Code section 2010, subdivision (e), courts have jurisdiction to review and make any judgment or order that is appropriate when settling the property rights of the parties in a divorce action. (Fam. Code § 2010 subd. (e).) Accordingly, the court may make any order it deems necessary to carry out the purposes of the family code. (Fam. Code § 2553.)
As such, when a third-party has an ownership interest in jointly owned property that will be distributed in the divorce’s property distribution proceeding, the third-party may apply to join the divorce proceeding.
Specifically, in a divorce proceeding, either spouse can join third parties who claim an interest in the parties’ community property. (Glade v. Glade (1955) 38 Cal.App.4th 1441, 1450-1451 citing Elms v. Elms (1935) 4 Cal.2d 681, 683; Fam. Code § 2021.) If the spouses do not join the third party, the third party claiming an interest in the property has a right to intervene in the proceeding. (Id.)
In a divorce proceeding, the court may join the third party if the court finds that determining the particular issue would be appropriate under the circumstances and if so, that the third party is indispensable or necessary to enforce the resulting judgment. (Cal. Rules of Court, Rule 5.24(e)(2).)
Importantly, family courts are not required to join the third party, even if the application meets all statutory requirements.
The court considers four factors when determining whether joinder is appropriate. First, the court must determine whether resolving the issue will cause the proceeding to be unduly delayed. Second, the court considers whether other parties must be joined to make the resulting judgment effective. Next, the court must determine whether resolving the issue will confuse the other issues in the divorce. Lastly, the court determines whether joinder will complicate, delay or interfere with the proceeding’s outcome. (Cal. Rules of Court, Rule 5.24(e)(2).)
Procedurally, to join a third party must file and serve a Notice of Motion and Declaration for Joinder (FL-371). The court must then set a hearing within 30 days of filing the notice. The Declaration must state with particularity the third party’s interest in the proceeding and the relief sought. (Cal. Rules of Court, Rule 5.24.)
“Divisible Divorce”
In California, the concept of “divisible divorce” is well-established. A divisible divorce allows parties to litigate disputes over the division of marital property in a separate action. (In re Marriage of Fink (1976) 54 Cal.App.3d 357, 362.)
Courts recommend bifurcation in “pivotal cases,” meaning instances where the parties want to terminate their marriage as soon as legally possible, but adjudicating the complex real property issues will require substantial time and resources. (Fam. Code § 2337(f).)
In divorce actions, parties must typically file a request for order asking the court to intervene and address issues regarding jointly owned property. In the partition context, these issues generally concern the property’s valuation, distribution, or management.
What is an Example?
For example, “Shawn” and “Julie” are siblings. Julie is married to “Bill.” Julie and Bill want to buy a house together, but do not have the credit necessary to obtain a loan. So, Shawn offers to take out the loan for the Property with his credit, as a co-owner of the Property, to help Julie and Bill. Julie and Bill accept Shawn’s offer and agree to accept responsibility for the loan’s monthly payments. Together, the three buy a home as tenants-in-common.
Years later, Julie and Bill are getting divorced. Bill has moved out of the Property, while Julie continues living there throughout the divorce proceeding. As the divorce proceeding nears the property distribution phase, neither Julie or Bill have joined Shawn as a party, but, both Julie and Bill have agreed that the court should divide the house.
Because Shawn is a tenant-in-common owner of the property, Shawn has a statutory right to intervene in the divorce action. Now, Shawn must file his declaration of joinder, asserting his ownership interest and right to be a part of the property distribution proceeding.
Conclusion
In sum, joining the property distribution proceeding of a divorce proceeding is the most direct way to ensure that all individuals with a legal interest in community property protect their interest upon distribution. At Underwood Law, our partition attorneys can help you navigate your partition action efficiently and with care. We are here to help.
