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Q: Divorcing in California and Trying to Understand the Effects of a QuitClaim. ( Answered 5 out of 5 stars,   2 Comments )
Subject: Divorcing in California and Trying to Understand the Effects of a QuitClaim.
Category: Family and Home > Families
Asked by: maddygirl-ga
List Price: $200.00
Posted: 24 Sep 2005 08:31 PDT
Expires: 24 Oct 2005 08:31 PDT
Question ID: 571998
My husband and I are divorcing after a seven year marriage. We've
lived together for 13 years and have a 12 year old child. I'm trying
to understand what is my community property interest in our house that
we are selling. I had moved in with my husband before we were married;
he sold that house and made a $1,000,000. profit. We rented for a
year, got married, purchased a house; I signed (big mistake?) a quit
claim on that house because he didn't want the vestiges of my bad
credit affecting the mortgage rate. He took title as married separate
property. Two years later we sold that property with another
$1,000,000. profit (thanks, California) and bought another property
and took joint title. We're now divorcing and he has just informed me
that he will have a greater share of the proceeds that I will. The
other assets are a pension plan, stocks that I just realized he holds
as separate property and his various business arrangements. The stocks
were worth MUCH more when we married than they are now. He didn't see
the bubble burst and the tech stocks nosedived. I'm also being told
that since this was not a (10 year requirement)long-term marriage,
I'll be looking at only short-term spousal support and will propably
lose my health insurance benefits. Arggh. Can someone help clarify
this situation before gazoodles go flying off to forensic accounting.
We are countering an offer on our house today before my lawyer has had
time to dig deep into this mess. Help!!!! (Some of this sounds
confusing; please ask for clarification. I know tracing the steps of
the money into and out of property and stocks will be important. This
is slightly complicated by the fact that all records, tax returns,
bills, etc are kept by his long-term business manager and we've just
begun the discovery process. And no, we never had a joint checking
account. Sadly, I accepted this and used credit cards; the bills were
paid by the business manager. I'm leaving this Doll's House!!!)
Subject: Re: Divorcing in California and Trying to Understand the Effects of a QuitClaim.
Answered By: leapinglizard-ga on 24 Sep 2005 11:39 PDT
Rated:5 out of 5 stars
Dear maddygirl,

You mention three houses in your chronology, the second of which
was subject to your quit claim. But let's start by considering the
first house. This belonged to your husband before you married, so
the proceeds from its sale, including the profit, are your husband's
separate property. Under section 770 of the California Family Code, you
have no claim to the sale proceeds of the first house. The exception
is if the two of you made mortgage payments on that house from your
community funds, in which case you are entitled to a sum computed by the
Moore-Marsden formula, which takes into account the effects of interest
and depreciation.

Note especially articles (1) and (3) of the following law.

    770.  (a) Separate property of a married person includes all of
    the following:

        (1) All property owned by the person before marriage.

        (2) All property acquired by the person after marriage
        by gift, bequest, devise, or descent.

        (3) The rents, issues, and profits of the property
        described in this section.

        (b) A married person may, without the consent of the
        person's spouse, convey the person's separate property.

FindLaw: California Family Code: Section 770

There is a strong presumption under California law that any property
acquired during a marriage is community property. If your husband wishes
to claim the second house as his separate property, the burden is on him
to prove that you willingly transmuted the house from community property
to separate property. Transmutation is defined under section 850 of the
Family Code.

    850.  Subject to Sections 851 to 853, inclusive, married persons
    may by agreement or transfer, with or without consideration,
    do any of the following:

        (a) Transmute community property to separate property
        of either spouse.

        (b) Transmute separate property of either spouse to
        community property.

        (c) Transmute separate property of one spouse to separate
        property of the other spouse.

FindLaw: California Family Code: Section 850

Your signature on the quit claim is not automatically considered to
be a transmutation of the house from community property to separate
property. In fact, since you purchased it with community funds and
lived in it together, there is every indication that it continued to be
community property, even though your husband is free to dispose of the
house as he wishes by virtue of the quit claim. Remember, the house is
presumed to be community property unless your husband can prove otherwise.

Another fact that benefits you is that the quit claim was arranged
solely as a financial shelter and not as a true means of transferring
the property out of the marriage. There is some room for the lawyers to
argue, but if he tries to claim the second house -- which was acquired
in marriage, inhabited in marriage, and sold in marriage -- as a separate
property, then he is at a decided disadvantage before the court.

You have said nothing to suggest that the third house is anything but
community property, so you should share its value equally in the divorce

To recapitulate, the settlement will indeed be unequal if your husband
succeeds in showing that the proceeds from the sale of the first house
were kept separate from your community funds. If he was careful to
prevent commingling, which is the joint holding and disposition of your
respective funds to the point where the court is unable to distinguish
which part belongs to whom, then he will be able to claim the sale value
of the first house as a separate property.

The second house is presumed to be community property under the
California Family Code. The quit claim is not prima facie evidence
for a transmutation of the house from community property to separate
property. It is your husband, and not you, who faces an uphill battle
on this front.

It has been a pleasure to address this question on your behalf.



Request for Answer Clarification by maddygirl-ga on 24 Sep 2005 13:46 PDT
Thank you so much for your answer. Could you help clarify my position
on the third house. My husband has informed me that the proceeds from
the sale of this house will not be divided equally. This is the point
that is the most confusing and most important. (For clarification, I
have been a stay-at-home mom for the last 12 years; I had closed my
business when on our son's first birthday and had no income
The first house profits, before our marriage, were used to get into
house #2. The profits from the sale of house #2 were used for the
purchase of house #3.
Thanks so much.

Clarification of Answer by leapinglizard-ga on 24 Sep 2005 15:17 PDT
Your husband cannot claim a greater share of the proceeds from the
sale of the third house based on that argument. Of course some of his
money from the first house went into buying the second house, and then
from the second house into the third. But if it were possible to trace
funds back to their origin on that basis, there would be no such thing
as community property. Your husband's line of reasoning does not agree
with the law.

Community property is the governing principle in California. This
means that any property purchased during a marriage by either spouse
immediately becomes community property. The law is very clear on this

    760.  Except as otherwise provided by statute, all property, real or
    personal, wherever situated, acquired by a married person during the
    marriage while domiciled in this state is community property.

FindLaw: California Family Code: Section 760

It doesn't matter if your husband feels that he bore the greater
financial burden in buying the second or third house. The bottom line
is that when you are married, all real-estate purchases by either
spouse are considered communal. That is the essence of marriage.

The only exception, again, is if one spouse is able to prove that a
purchase was set aside as a separate property with the other spouse's
consent. This is clearly not true in the case of a house that you
jointly inhabited, regardless of whose money paid for it or whose name
was on the deed. Such considerations may make a difference in other
states, but not in California.

When your husband alludes to unequal distribution, perhaps he is
thinking of some other, earlier funds of his that he set aside. Or
perhaps he is consciously deceiving you as a negotiating tactic to
force some concession. One can only speculate about his motives. It is
plain to me that his legal argument, as you report it, is wrong.


maddygirl-ga rated this answer:5 out of 5 stars and gave an additional tip of: $20.00
Thank you for your answer and research. I appreciate greatly your
logical thinking and providing such a well-thought out and researched

Subject: Re: Divorcing in California and Trying to Understand the Effects of a QuitClaim.
From: leapinglizard-ga on 24 Sep 2005 16:59 PDT
Thank you for your fine rating and your kind tip.

Subject: Re: Divorcing in California and Trying to Understand the Effects of a QuitClaim.
From: taxmama-ga on 25 Sep 2005 13:22 PDT
Dear Maddygirl,

Remember one thing, about your brief, 7 year marriage.
California is the state where palimony originated. 

Have your divorce attorney do some digging in the 
palimony laws to see if they can be applied to you
for the 5 years you lived together, with a child, 
having given up your business and your career. 

I suspect you might find a little bonus in the 
length of the alimony you'll receive if those 
circumstances are taken into account. 

Just a thought...for a strategy you might want to consider.

Best wishes,

Your TaxMama-ga

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