Keepthemhome, there is an argument that can be made. It's complex,
and even if it were successful, Husband would still be entitled to
reimbursement for his separate property contribution of $300K or so,
but there is an argument for the house being considered community
property.
Please note that the following IS NOT LEGAL ADVICE. You should engage
a skilled, experienced family law attorney to assist you -- ESPECIALLY
with so much at stake. The following is simply a review of the
relevant legal principles.
At the outset, let me indicate an assumption. Since you state that
Wife signed a quitclaim deed on the property during the marriage, her
name must have been on the property at one point. I assume that the
Husband put the property in both their names when the original $150K
mortgage was taken out. Correct?
When Husband put the property in both their names, it is presumed that
the property became community property at that point -- UNLESS there
was a written agreement to the contrary. Family Code Section 2581.
From the case _In re Marriage of Weaver_ (2005) 127 Cal.App.4th 858, 865:
"Under section 2581, all property held in joint title by spouses
during marriage is presumed to be community property upon dissolution,
rebuttable only by written evidence to the contrary. [Citation.] Such
evidence must consist of either '[a] clear statement in the deed or
other documentary evidence of title by which the property is acquired
that the property is separate property and not community property, []
. . . [or by p]roof that the parties have made a written agreement
that the property is separate property.' (§ 2581.) Thus, under section
2581 spouses cannot hold property in joint title while preserving the
property?s separate property characterization through oral or implied
agreements."
So, IF the property was put into joint title at the time of the $150K
mortgage, the presumption is that it became community property AT THAT
POINT.
However, the Husband would still be entitled to reimbursement from the
community for his separate property interest. Family Code Section
2640.
"But even if property held in joint tenancy loses its separate
property characterization under section 2581, section 2640 provides a
right to reimbursement upon dissolution for the spouse who contributed
separate property to the acquisition of property held in joint title,
absent a written waiver of the right to reimbursement."
_In re Marriage of Weaver_ (2005) 127 Cal.App.4th 858, 865.
See also:
_In re Marriage of Anderson_ (1984) 154 Cal.App.3d 572
_In re Marriage of Neal_ (1984) 153 Cal.App.3d 117
_In re Marriage of Perkal_ (1988) 203 Cal.App.3d 1198
So under this theory, when Wife's name was originally put on the title
in order to get the loan, that creates a presumption that the house is
now community property; Husband is entitled to reimbursement for the
value of the house up to that time --
and here's the important part --
and any appreciation taking place after that BELONGS TO THE COMMUNITY.
"Under Section 2640, in case of dissolution of the marriage, a party
making a separate property contribution ... is entitled to
reimbursement for the separate property contribution at dissolution of
marriage. The separate property contribution is measured by the value
of the contribution at the time the contribution is made. Under this
rule, if the property has since appreciated in value, the community is
entitled to the appreciation."
_In re Marriage of Weaver_ (2005) 127 Cal.App.4th 858, 866, quoting
from Cal. Law Revision Com., reprinted at 29D West?s Ann. Fam. Code
(2004 ed.) foll. § 2640, at p. 590.
But -- what about the quitclaim deed? If the deed is upheld as valid,
then Wife has waived her right to any community interest in the home.
And it is difficult to set aside a deed. However, there is an
argument to be made that the quitclaim deed should be set aside as a
result of undue influence. I can't say that the argument would
necessarily succeed -- but there is case law that would support the
argument.
As I understand it, the argument is that the quitclaim deed was never
actually intended to relinquish Wife's interest, and was executed only
as a result of assurances by Husband that the house was still
"theirs", and that he only wanted to protect "their" property from
Wife's potential business liabilities. So the argument is that the
quitclaim deed was obtained as a result of fraud, mistake, or undue
influence, and should be set aside.
There are two statutes at play here, and they conflict.
Evidence Code Section 662 provides a strong presumption in favor of
the validity of title, and requires "clear and convincing evidence" to
overturn a facially valid deed.
However, Family Code Section 721 provides that husband and wife are in
a confidential and fiduciary relationship with each other: "This
confidential relationship imposes a duty of the highest good faith and
fair
dealing on each spouse, and neither shall take any unfair advantage of the other."
Accordingly, when married people engage in a transaction that clearly
favors one of them over the other, that transaction will be presumed
to be invalid unless the benefited spouse can prove that the
transaction was fair.
From _In re Marriage of Baltins_ (1989) 212 Cal.App.3d 66, 88:
"The marriage relationship alone will not support a presumption of
undue influence by one spouse over the other where the transaction
between them is shown to be fair. But, where one spouse admittedly
secures an advantage over the other, the confidential relationship
will bring into operation a presumption of the use and abuse of that
relationship by the spouse obtaining the advantage."
I think it's pretty clear that the quitclaim of the house, with no
payment in exchange, gave Husband an advantage over Wife in this case.
Under these circumstances, there is case law to support the argument
that Family Code Section 721 prevails over Evidence Code Section 662,
and it should be Husband's burden to prove that the transaction was
fair.
In _In re Marriage of Haines_ (1995) 33 Cal.App.4th 277, the husband
had a house as his separate property prior to the marriage. During
the marriage, he conveyed the house to himself and his wife as joint
tenants, in order to refinance the mortgage. (Sound familiar?) But
after that, he demanded that she quitclaim her interest back to him.
She refused, but he persisted. Ultimately, when they were about to
split up, he demanded a quitclaim in exchange for co-signing a car
loan with her, because she needed a car and couldn't qualify on her
own. She signed a quitclaim.
The Court stated that it was up to the husband, in that case, to prove
that the quitclaim deed was NOT obtained by undue influence. The
Court said that the Husband must "prove the quitclaim deed was freely
and voluntarily made, and with a full knowledge of all the facts, and
with a complete understanding of the effect of the transfer." _In re
Marriage of Haines_ (1995) 33 Cal.App.4th 277 at page 298. Because
the husband had failed to prove that the wife gave up the property
"freely and voluntarily..., with a full knowledge of all the facts,"
the quitclaim deed was set aside by the court.
Now, you should note that this would not deprive Husband, in your
case, of his right to seek reimbursement from the community for the
value of the property as of the time he put Wife's name on it. But --
under this argument -- the community, and not the Husband, would be
entitled to the appreciation of the property since then.
I hope this information has been helpful. I can't stress enough,
however, that you MUST obtain professional legal advice. The above is
just information about California law. What to do with that
information is what you need a lawyer for.
Best of luck! |
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