Characterization of property: the process of classifying property as separate, community, or quasi-community. Where property status cannot otherwise be proved, characterization is determined by applicable presumptions:
· One category of presumptions includes those presumptions arising from the form of title, such as the joint title form presumption codified in § 2581, and the general common law presumption in favor of title (EV code § 662).
· Therefore, absent a contrary statute, and unless ownership interests are otherwise established by sufficient proof, record title is usually determinative of characterization
In re Ettefagh: What burden of proof is required to overcome the presumption that property acquired during marriage is CP?
· Gift presumption and CP presumption required a “preponderance of EV” and not the higher “clear and convincing” standard.
· Direct evidence of one credible witness is enough to est. facts necessary to rebut
TITLE GENERALLY: Form ordinarily gives rise to the presumption that characterization is according to title; rebuttable. ***Title presumptions are not rebuttable by tracing back to SP funds (but there is a right to reimbursement**
1. Tenancy in Common
(1) “To A & B…”
(2) Default: (1) ppty passing through intestacy & ppl end up as co-owners OR (2) language is not clear enough to create a joint tenancy
b. Can own in equal or unequal shares
c. Fully transferable
(1) Any tenant can transfer by gift @ death
(2) Can sell share
2. Joint tenancy w/ ROS
a. Created: “To A & B with the right of survivorship…”—must have clear and explicit intent.
b. Own in equal shares (no matter how much one person paid)
(1) Inter vivos (during life)
(2) Will destroy the joint tenancy’s ROS. E.g. Joint tenancy with 3 interests (A/B/C). If A transfers during life to X, then have 3 co-owners. A’s transfer destroys the ROS. X will then be a tenant in common to B & C.
d. Right of survivorship upon death
a. During life, cannot unilaterally transfer his/her own interest
b. Upon death, either spouse can transfer their share of CP to anyone
c. Equal shares
d. Mutually exclusive from the others
(1) Cannot have JT ROS w/ CP. Will be SP if characterized as JT ROS & T-i-C
4. Survivorship CP—NEW
a. Explicit intent
b. Equal shares
c. No transferability
(1) During life, can’t sever CP interest.
(2) @ death, there is a right of survivorship
5. No tenancy in entirety in CA
Forms of Title that Raise Presumptions of Gift or Agreement to Transmute
1. Married Women’s Special Presumption (MWSP) § 803
2. Property Held in Joint Title
a. JOINT TENANCY PRESUMPTION
(a) Triggering facts: Title in joint tenancy + non-divorce situation–death or need to characterize ppty during marriage (e.g. bankruptcy)
(b) Presumption: Assume joint tenancy
(c) Rationale: Effectuate the intent of the parties
(d) Rebut: Other intent, understanding, or agreement
Schindler v. Schindler (1954): H and w bought a house after moving to CA. Deed says, ‘joint tenants.’ Getting a divorce. W is trying to get this as CP so that the ppty can be disposed of in the divorce (this is before no-fault divorce; thus, ct may award W, the injured party, damages by giving her more than ½ the house). W tried to rebut the presumption: (a) ppty paid for w/ community money, and (b) W had a secret understanding that the ppty was CP.
(a) Ct: Evid of paying in community funds is not sufficient alone.
(b) No need to have intent/understanding/agreement in writing, but NEED EV OF A MUTUAL UNDERSTANDING The unrevealed intention of one party alone for the property to remain a part of the community is not effective
Bowman v. Bowman: H and W own ppty in “joint tenancy.” H and W thought that the ppty was “theirs.” H knew it was JT, and that it would help to avoid probate, but not much else.
(a) The deed to the property was taken in joint tenancy, which raises a rebuttable presumption that the property was in fact held in joint tenancy, and places on the party claiming it to be community property the burden of overcoming the presumption.
(b) Ct: Presumption rebutted. H and W thought of the ppty as “ours.” Also had no idea what joint tenancy is.
(3) Implications of Joint Tenancy at Dissolution
(a) If CP, couple has fiduciary duty b/t themselves as to mgmt and control of the CP. At divorce, judges do not have discretion to divide CP as anything but ½.
(b) If joint tenancy, any side can transfer the interest, just need to have permission.
SP contributions to the Acquisition of CP
Lucas: Ppty at issue: house and motorhome. W used part of her own trust to pay for the house (about 25%). The remainder was CP (75%). Deed said, “joint tenancy.” W also used trust funds ($3k) to make improvements on the house. [in general, this is treated as a gift or reimbursement—doesn’t really go to the ownership of the house]. Value of house appreciated, nearly doubled in value.
(a) At time of Lucas, 3 approaches in CA courts:
1) Aufmuth: Will show a proportional ownership interest in the house which is determined by which funds went into the purchase price.
2) Trantafello: Treat house as CP unless there was mutual agreement or understanding otherwise
3) Bjornestad: Characterize the house as CP and reimburse the SP
(b)Held: Presumes CP—even if there is a SP contribution
i) “The act of taking title in a joint and equal ownership form is inconsistent w/intention to preserve a SP interest.” Thus,
o rebut the presumption of CP created in 2581.
§2580 and § 2581: Presumption concerning property held in joint form:
a. How do we characterize the asset?
i. For any jointly titled asset, regardless of the date of acquisition is the presumed to be community property.
b. Has the presumption of characterization been rebutted (by agreement)?
i. If starting with CP presumption, the SP proponent has the burden of proof.
ii. The only way to rebut the CP presumption is with evidence of another agreement.
c. Does a separate property contributor have a right of reimbursement (i.e., do they get any money back?
i. Any separate property contributions after 1/1/1984 are reimbursed.
ii. Any separate property contribution before 1984 are not reimbursed, absent an agreement to the contrary.
Walrath: H owned a property in Lucerne before marriage. 1992: After MA Lucerne mortgage was refinanced, and titled was deeded to H and W as joint tenants. At the time of the refi, the property had a FMV of $228k and a mortgage balance of $82,000k, yielding equity of $146,000. At a later, unspecified date, W used $20,000 of her SP to reduce the indebtedness on the property.
In 1993, the Walraths again refinanced the property, borrowing an additional $180,000:
· $60,000 was used to reduce the encumbrance on the Lucerne property;
· $62,000 was used to pay off the mortgage on a community real property in Nevada;
· $40,500 was used to acquire and improve real property in Utah;
· $16,000 was deposited into a joint savings account.
At divorce, H claimed that his original SP contribution ($146,000) should be traced to the Nevada and Utah properties and the joint savings account, as the Lucerne property only had $1,000 in equity at the DOS.
CT: If H seeks reimbursement, he must be able to calculate the ratio of his SP contribution to the original property’s total equity at the time of refinancing and ascertain what portion of the loan proceeds represented his SP contribution traceable to the new asset.
Thus, H entitled to 81% (b/c 146/180 = 81%)
Property titled as CP: 3 timelines to keep in mind to determine the presumption (pre-1984, between 1984 and 1986, and 1987 and beyond).