Is the house community property under California community property law? This is a question people ask while negotiating prenups, post-nuptial and transmutation agreements, or navigating legal separation, divorce, or the dissolution of a domestic partnership. Bankruptcy and other trustees also need to know which assets are community property under family law to determine whether a married spouse’s house is part of a bankruptcy or probate estate.
At times, it’s easy to determine if the house is community property under California community property law. More often than not, it presents a perplexing puzzle for lawyers, judges, and spouses alike. The perplexities arise from the law and transactions of married couples who buy, sell, improve, and refinance property and create estate plans.
There are a number of legal presumptions that can determine the characterization of real property that is acquired before marriage, during marriage, and after separation, or transferred between spouses, but they aren’t always conclusive, may conflict, and are rebuttable.
What’s a legal presumption? “A legal inference that must be made in light of certain facts. Most presumptions are rebuttable, meaning that they are rejected if proven to be false or at least thrown into sufficient doubt by the evidence. Other presumptions are conclusive, meaning that they must be accepted to be true without any opportunity for rebuttal.” (Cornell Law School LII)
California Community Property Presumptions
California family law includes a number of legal presumptions that require a judge to infer that a house is community property or separate property if a spouse proves a particular set of facts. A spouse or partner can rebut, and a judge can reject the legal presumption if the spouse who challenges the presumption proves a set of contradictory facts or that a conflicting legal presumption prevails.
California Family Code § 760 creates a rebuttable presumption that real property such as a house, wherever situated, that is acquired by a married person during the marriage while domiciled in California is community property. If a spouse proves that a spouse acquired a house during marriage while being a California domiciliary, a family law judge can presume that the house is community property.
A spouse can rebut the California Family Code § 760 community property presumption in a number of ways. One way is to prove that the property is separate property under California Family Code § 770. A second way is to establish that the property was validly transmuted under California Family Code § 852, but to do this, a spouse who benefitted from the interspousal transfer must overcome a legal presumption of undue influence. Another way is to show that a different legal presumption prevails, which isn’t always an easy feat as illustrated by the discussion in the California Supreme Court’s opinion in In Re Brace.
3 key factors that determine if a house is community property under California community property law
The California Supreme Court and Courts of Appeals’ opinions serve as precedence that parties must rely upon in conjunction with California Codes to determine if a house is community property or separate property.
Broadly speaking, California caselaw and Codes establish that there are 3 key factors that determine if a house is community property under California community property law. The 3 key factors are:
- Time – When the property was acquired and transferred
- Title – Who and how a spouse or spouses hold or held title to the property
- Transmutation – Whether one spouse validly transferred their interest in real property to the other and effectively transmuted (legally transformed) community property into separate property or separate property into community property or the separate property of one spouse into the separate property of another spouse
Evidence that may determine if a house is community property under California community property law includes:
- Property deeds
- Wills and Trusts
- Prenuptial, postnuptial, and transmutation agreements
- Articles of Incorporation, Partnership Agreements, and LLC Articles of Organization and Operating Agreements
The overarching steps to determine if a house is community property under California community property law are:
- Identify the property at issue and analyze each piece individually
- Determine the dates of marriage, acquisition, separation, and transfers
- Ascertain who held title on the dates of marriage, acquisition, separation, and transfer
- Apply the law and legal presumptions
- Rebut the legal presumptions if possible
Some of the questions to ask to determine if a house is community property under California community property law are:
- When was the property acquired?
- By whom was the property acquired?
- Who holds title to the property?
- How does a spouse or do the spouses hold title to the property?
- Was the property a gift or inheritance?
- Was the spouse domiciled in California on the date of acquisition?
- Was the property subject to any interspousal transfers during marriage?
- Which legal presumptions apply and prevail?
- Can a spouse rebut the legal presumptions?
If a California family court judge concludes that a house is separate property, two related questions to ask are, does the community have any rights of reimbursement and did the community acquire a community property interest in the house?
If a California family court judge concludes that a house is community property, a related question to ask is, does a spouse have any rights of reimbursement for separate property invested into the house under California Family Code § 2640 or any other Code sections or caselaw, such as In Re Marriage of Epstein?
*This article is not exhaustive and does not include all of the presumptions, factors, steps, and questions that determine if a house is community property under California community property law. A case by case analysis and review of the ever evolving law are necessary to make a legal argument and reach a legal conclusion about the characterization and division of property under California family law.