When an asset was acquired during marriage and title is held in one spouse’s name alone (title to the family residence, for example), it is frequently assumed that the titleholder owns the asset alone as his or her separate property.
During a divorce, title ownership is not the end of the community property or separate property analysis. For a number of reasons, the conclusion is not straight forward. Like so many legal questions, the answer is “it depends.” Determining who gets the house during a divorce requires us to consider some important details.
Who Gets the House in a Divorce in California?
If the house qualifies as separate property, then the spouse that is considered the sole owner will receive it in the division of property. However, if the house is community property, there are a few different ways it can be divided in the divorce judgement:
- The property is sold and profits are divided
- One spouse can buy out the other’s share
- Both spouses remain on the title (deferred sale), often used in cases involving minor children
In many California divorces, determining who will keep the house isn’t that simple. Many of our clients find themselves in a situation that involves a title that lists only one spouse – what happens then?
Does the Titleholder Get the House in a Divorce?
Frequently, property is purchased during marriage with title placed in only one party’s name, for reasons that may include:
- One spouse has a better credit rating.
- Only one party can qualify for a mortgage or qualifies under more favorable interest terms. In this scenario, the title insurance company insists that this spouse take initial title concurrent with the purchase and mortgage and the other spouse executes a quitclaim deed.
- The parties plan to “put the other spouse back on title later” but don’t do so (for whatever reason).
Even when the title to a home purchased during a couple’s marriage is in the name of just one spouse, the house is not always categorized as separate property. In the eyes of the California divorce court, community ownership depends upon when the house was purchased and how the equity was acquired.
Title ownership can be contested in a divorce. The spouse unnamed on the title can make an attempt to show that there was an agreement or understanding that the house was a co-owned property, even if the title says otherwise. Rebutting the title can be challenging, and requires supporting evidence. For example, if community property was used to contribute to purchase the home and pay the mortgage, this could contribute to the claim.
Unless the community property used to purchase the asset was properly “transmuted” (see Family Code §852) to the titleholder’s separate property, the general presumption that the home is community property will prevail over the title presumption in the Evidence Code.
That’s the holding from the appeal in Frankie Valli’s divorce case (the singer from the Four Seasons, “Sherry” and “Grease”); see Marriage of Valli (2014) 58 Cal.4th 1396. The case involved a valuable life insurance policy. The insurance company listed one spouse as the “owner” of the policy, but the premiums had been paid during the marriage with community property, so title ownership wasn’t the end of the story.
In California divorce cases, spouses have very high (fiduciary) duties to each other. These duties prevent one spouse from gaining an improper advantage over the other. Divorce attorneys will look carefully at any transaction where one party releases interest in an asset to the other during marriage to determine if his or her client was disadvantaged.
What is an Interspousal Transfer Deed and How Does it Affect Division of Property in a CA Divorce?
Interspousal transfer deeds on real estate can also be very problematic, unless you have an experienced divorce attorney prepared to help. An interspousal transfer deed in California is used to transfer title/ownership from one spouse to another. Through a transfer deed, community property can become separate property, and vice versa.
We have been involved in many cases when one spouse signed over title to a house during a refinance. Whether this was a valid release for division of the community estate is very nuanced. The issue is frequently litigated and appealed. There is a legal presumption that when an interspousal transfer favors one spouse, it was induced by undue influence and is therefore invalid.
Turn to Our Sacramento Divorce Lawyers for Expert Legal Guidance and Support
Are you considering a divorce or separation in Sacramento, Placer, El Dorado or Yolo County? Do you have more questions about community property, transmutations, or protecting your rights to property acquired during marriage when you’re not on title?
The Sacramento divorce attorneys at Hughes Law Group can help, ensuring that you have an experienced legal advocate on your side at every stage of the divorce process. Give our divorce lawyers a call or schedule your appointment with a family law attorney online.