California Partition Law Blog
The purpose of this article is to explain the ownership presumption in a probate dispute. This is because property ownership can cause disputes even after death, which must be resolved in the probate or civil courts. (Schlyen v. Schlyen (1954) 43 Cal.2d 361, 370–371.) Specifically, the understanding of how marriage affects ownership presumptions in probate matters was changed in the 2021 case Estate of Wall (Wall). ((2021) 68 Cal.App.5th 168.) This case affects how trial and probate courts will consider ownership disputes. Because this specific case dealt with a probate action, it concerns the property and assets of a decedent. In Wall the court held that the title presumption prevails over the community property presumption.
What is an Ownership Presumption?
Marriage and death can both affect the presumption of who owns a disputed piece of property. There are two main presumptions which affect these disputes. First, the title presumption is that the property title being in a person’s name means that person will prevail in an ownership dispute. (Pearce v. Briggs (2021) 68 Cal.App.5th 466, 483.) The title presumption is derived from the evidence code. (Evid. Code, § 662 .) Second, the community property presumption is that the property being purchased with community funds of a married couple means the property belongs to the community (both parties) in a property dispute. (In re Brace (2020) 9 Cal.5th 903, 938.) The community property presumption is based on the family law code. (Fam. Code, § 760.) If a court rules the title presumption will prevail that means the person with their name on the title will prevail even if the property was bought during their marriage with community funds.
How did the Estate of Wall Decision Impact Ownership Presumptions?
The Wall decision is significant because title presumption and community property presumption may conflict if a property was acquired during marriage that was not a gift or inherited (and as such would be presumed community property.) (Estate of Mitchell (1999) 76 Cal.App.4th 1378, 1385-86.) In Wall, it was titled only in the name of one spouse. This conflict is also an issue where property is titled in the name of both spouses as joint tenants with the right of survivorship. The property in that case would be considered community property when both people are alive but once one spouse dies the decedent’s entire share would go to the surviving spouse. (Raney v. Cerkueira (2019) 36 Cal.App.5th 311, 320.)
In Wall, Benny Wall had two kids with his first wife. His home was then foreclosed on. Benny later met and married Cindy in 2008. They moved in together but did not commingle their assets. In 2010, Benny purchased a home that was titled as property of a “married man” but as his sole property. Benny paid for the entirety of the down payment. Benny made all mortgage payments from his own funds. Cindy’s name was not listed on the title. She was also liable for the property’s loan. Benny passed away in 2016 without a will and Cindy petitioned the probate court, arguing she had a community interest in the home. Benny’s children objected, claiming the house was Benny’s property and title presumption controlled. A trial court granted Cindy’s petition to determine title.
At trial, Cindy argued Benny told her that she partially owned the home. Benny requested she sign a quitclaim deed in favor of Benny while assuring Cindy that the deed meant nothing. Cindy also wrote a check for $3,500 in 2008 intended for the down payment and later contributed to improvements to the home. The mortgage broker testified that he believed Cindy and Benny were purchasing the home jointly. Cindy and Benny split household expenses and the rental income from Cindy’s son and nephew who rented rooms in the home. The trial court held the house was community property and Cindy held a half interest.
The Third Circuit heard the case on appeal. The appellate court considered how Evidence Code section 662 supports the understanding of title presumption and that this presumption can only be rebutted through clear and convincing proof. The court also noted that Family Code section 760 states that all property acquired by a married person during a marriage is community property. So, while the court recognized title presumption in a probate matter, Cindy prevailed because of undue influence.
How did the Decision in Wall Address Prior Case Law?
The decision in Wall was noteworthy because it discussed two California Supreme Court decisions which had held the community property presumption had authority over the title presumption. The court in Wall differentiated Cindy and Benny’s case from the prior case law because it took place in a probate context regarding a decedent’s property.
In 2014, the California Supreme Court considered a dissolution action between spouses in In re Marriage of Valli. ((2014) 58 Cal.4th 1396, 1399.) In this action there was an insurance policy bought with community funds but only in the wife’s name. The Valli court held the community property presumption prevailed and the policy was community property. (Id. at 1406.) However, the court specified this was limited to action between spouses.
In 2020, the California Supreme Court considered a bankruptcy action involving spouses and a bankruptcy trustee. (In re Brace (2020) 9 Cal.5th 903, 913.) In Brace the court expanded the holding of Valli and held the community property presumption was superior to title presumption in actions involving third parties. (Id. at 928.) This meant it was not limited to only spouses, however the presumption was unlikely to apply to actions involving the assets of a decedent. This is because a property held in joint tenancy at the death of a joint tenant requires title presumption to control for the asset to pass to the surviving joint tenant. (Civ. Code, § 683.2.)
The court in Wall disagreed with Brace and differentiated it as it dealt with property rights in a bankruptcy context not following the death of a spouse. This means title presumption does not necessarily control following death and separate property can become community property. (Estate of Wall (2021) 68 Cal.App.5th 168, 175.) Benny’s house would have been his property if title presumption was not rebutted by strong evidence of undue influence in the purchase of the house over Cindy.
Conclusion
Estate of Wall established that title presumption will prevail in a probate ownership dispute. However, the title presumption can be rebutted in favor of a community property presumption if there was undue influence in the real estate transaction. (Fam. Code § 721.)
The Underwood Law Firm has a team of experienced lawyers who can help resolve your property ownership disputes as they relate to partition and help you pursue solutions before the property goes to probate.