California Partition Law Blog
In California, title is determinative in some instances. This means that a court’s characterization of property in a marital dissolution proceeding determines the division of the property between spouses. How a property is titled may also affect the property’s protection from creditors, taxes, and the probate process. Understanding how and when title is determinative is important because married individuals may hold title in various forms affecting their interests in dissolutions.
What is a Property Title?
A title is not a physical document given to individuals who acquire interest in property. Instead, a property title is a legal concept made up of various documents, like deeds and surveys, that represent various rights inherent in the ownership of real property. It is important to distinguish the difference between a Title and a Deed. Title refers to the concept of legal ownership of property. Oppositely, a deed is the physical document that transfers legal ownership of the property. In short, deeds help establish title.
Types of Title
There are two main types of titles relating to real property: (1) Legal Title and, (2) Equitable Title. Legal title speaks to the actual ownership of the property and is typically shown through deeds. Equitable Title deals with the right to obtain legal title to a property. Titles are generally used to establish ownership rights, mitigate risks associated with property management, and provide legal protection through established ownership rights.
In California, spouses can hold property as Joint Tenants, Tenants in Common, as Community Property, or as Community Property with a Right of Survivorship. (Fam. Code, § 750.) Each are explained in turn below.
- Community Property: In California, any property obtained during a valid marriage or registered domestic partnership is considered to belong equally to both partners. Property received through inheritance, gifts, or prior to the marriage or partnership is not community property.
- Community Property with a Right of Survivorship: Community Property with a Right of Survivorship means that any property obtained during a valid marriage or registered domestic partnership automatically transfers full ownership to the surviving spouse or partner upon the other’s death.
- Joint Tenants with a Right of Survivorship: Joint Tenancy with a Right of Survivorship allows two or more individuals to share equal ownership of real property regardless of marriage or registered domestic partnership status. All joint tenants share the property’s obligations in a Joint Tenancy with a Right of Survivorship. Additionally, the surviving joint tenants automatically assume the ownership interest of a deceased tenant upon that tenant’s death. It is impossible to create a joint tenancy without a right of survivorship.
- Tenants in Common: Tenants in Common means that two or more individuals share ownership of a property by each having a distinct and transferable property interest. These distinct and transferable property interests do not have to be equal meaning, one tenant may hold a 60% interest while the other holds only 40%. A right of survivorship does not exist in a tenancy in common.
When the title determines property is a spouse or registered domestic partner’s separate property, they possess Sole Ownership. Sole Ownerships means one individual is the sole and separate owner of the property because they have an undivided interest in the property.
When is Title Determinative?
Title is determinative when determining whether real property is held as community or separate property. (Evid. Code, § 662.) A common law presumption exists to establish that absent an applicable state law or evidence of contrary intent, record title is determinative of real property’s characterization as separate or community property. (Id.) Property acquired during a valid marriage or registered domestic partnership is subject to this common law presumption because California is a community property state.
In In re Marriage of Valli, the court affirmed the applicability of this common law rule to a life insurance policy listing only the name of one spouse. ((2014) 58 Cal.4th 1396.) Here, the husband used funds held as community property to purchase a life insurance policy on his own life in his wife’s name. The husband was experiencing serious medical issues and wanted to ensure his wife of twenty years, and three young children would be taken care of if he were to pass away when he purchased the policy. Years later, the children are now adults and the couple, who has been separated for nearly 10 years, has decided to dissolve their marriage. A dispute over whether the policy was community, or separate property arose during the dissolution because the husband had put the policy in his wife’s name to ensure she would be able to care for their children. (Id.)
The court of appeals in Marriage of Valli, applied the common law rule established in In re Marriage of Benson (2005) 36 Cal.4th 1096, that a court’s characterization of the parties’ property in a marital dissolution proceeding, whether as community or separate property, is determinative of the property’s division between spouses. Under the application, the life insurance policy was found to be the wife’s separate property because the “Form of Title Presumption” applied. The husband’s act of naming only the wife on the life insurance policy during their marriage acted as mutual consent to remove the life insurance policy from the marriage’s community property. The court stated that absent a showing of clear and convincing evidence to rebut this presumption by establishing the husband did not intend for the policy to be the wife’s separate property, the presumption could not be overcome.
Are there Exceptions to this Presumption?
As with any presumption, there are exceptions that must be considered. The Supreme Court of California clearly established these exceptions in In re Brace (2020) 9 Cal.5th 903.) as follows:
- The “Form of Title Presumption” codified in California Evidence Code section 662 is inapplicable when it conflicts with the Community Property Presumption codified in California Family Code section 760. (Id. at p. 912.)
- Under California Family Code section 760, property is presumptively community property in a dispute between the couple and a bankruptcy trustee when a married couple acquires the property with joint tenancy title using community funds on or after January 1, 1975. (Id. at p. 912.)
- Property acquired before January 1, 1975, is presumptively separate property when interests arise from joint tenancy title. (Id.)
- Holding title between a married couple or registered domestic partnership in Joint Tenancy is alone insufficient to establish transmutation of community property into separate property. (Id.)
Transmutation is the process of changing real property’s character between spouses or registered domestic partners. Property can be transmuted in three ways: (1) From separate to community property; (2) from community to separate property; or (3) from one spouse’s separate property to the separate property of the other. California Family Code section 852 governs transmutations of property. (Id.)
What is an Example?
For example, “Shawn” and “Julie” have been dating for 10 years and are engaged to be married. During their fifth year together, Julie bought a house that Shawn and Julie immediately moved into together. Shawn does not pay for the mortgage and his name appears nowhere on the deed or corresponding title paperwork. Shawn does not pay for any other costs associated with the house.
On their 11th anniversary, Shawn and Julie get married. They are married for two years before filing for divorce. During their marital dissolution a dispute arises between Shawn and Julie because Shawn claims the house is community property because he has lived there since Julie bought it. No clear and convincing evidence exists to show that Julie intended to buy the house for Shawn. Shawn has never taken on any ownership responsibilities and all title paperwork is in Julie’s name only. Under the “Form of Title Presumption” the house is Julie’s sole property because she bought the house before her marriage to Shawn, despite their engagement. The classification as Julie’s sole and separate property is further supported by the complete lack of clear and convincing evidence of Julie’s contrary intent.
Conclusion
The Underwood Law Firm has a team of experienced lawyers who can help resolve your real property issues as they relate to partition and help you pursue solutions to ensure your property rights are protected. We are here to help.