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Husband Did Not Waive His Community Property Interest When He Signed a Deed Transferring Title of Their Property to Wife

Posted By Anthony P. Azemika, Esq.   |   Comments (0)
Family Law, Community & Separate Property, Divorce, Legal Cases,

 

 

In the case of In re Marriage of Begian and Sarajian, Mother and Father were married in August of 1993, and later they had two children. On April 29, 1996, Mother’s mother (Grandmother) signed a quitclaim deed that transferred an undivided 48% interest in a residential property to Mother. Grandmother retained a 52% interest in the property. That same day, Father signed a separate quitclaim deed transferring all of his right, title, and interest (community property or otherwise) in the property to Mother as her separate property. On June 21, 2001, Grandmother and Mother executed an Individual Grant Deed granting their respective interests in the property to Grandmother, Mother, and Father, all as joint tenants, giving Father a community property interest in the property.

Five years later, on May 1, 2006, Grandmother, Mother and Father signed a Trust Transfer Deed, which stated that “For No Consideration” each of them granted to Mother “the following real property” and listed the legal description of the property. The deed also stated that the conveyance was a bona fide gift which was not subject to documentary transfer tax.

Eight years later, on December 19, 2014, Mother created a separate property trust, with herself as trustee and the parties’ children as beneficiaries. She also signed another Trust Transfer Deed granting the property, as her separate property, to herself as trustee of the newly created trust.

Mother and Father separated in September of 2015. On June 29, 2016, Father filed for divorce, and asked Trial Court to confirm that the property was community property. In response, Mother contended that the property was her separate property.

Trial Court bifurcated (separated) the issue of the property’s characterization as community property or Wife’s separate property and set that issue for trial. At trial, Father argued that the Trust Transfer Deed he had signed did not contain “an unambiguous declaration of his intention, as the adversely affected spouse,” to transmute (change the character of) his community property interest in the property to Mother’s separate property. Father claimed that the deed had been executed in conjunction with estate planning and that there had been “absolutely no mention” of changing or adversely affecting his property rights in the property. In opposition, Mother argued that the word “grant” in the deed was an unambiguous declaration that Father intended to change the characterization of his interest in the property from Joint Tenancy to Mother’s separate property. Mother contended that the deed could not be interpreted as transferring the property into her trust because the deed did not mention her trust, which did not exist when the deed was signed.

In a statement of decision issued on August 29, 2016, Trial Court found that the word “grant” in the Trust Transfer Deed was an express declaration of Father’s intent to transfer his interest to Mother and that the mention of a bona fide gift put Father on notice that he was making a gift to Mother that changed the characterization or ownership of the property. Trial Court also determined that the title of the deed did not mean that the property was being transferred into a trust, since no trust was identified on the face of the deed. On September 14, 2016, Trial Court filed an order deeming the property to be Mother’s separate property. On October 3, 2016, Trial Court certified the issue of the characterization of the property for immediate appeal.

Now, acting on Father’s appeal, the California Court of Appeal has reversed Trial Court. The Appellate Court has ruled that (1) pursuant to California Family Code Section 852(a), a valid transmutation must be made in writing by an express declaration made, joined in, consented to, or accepted by the spouse whose interest in the property is adversely affected; (2) pursuant to the California Supreme Court’s decision in the case of In re Estate of MacDonald (1990) 51 Cal.3d 262, the declaration must expressly state that the characterization or ownership of the property is being changed, without resort to extrinsic (outside) evidence; (3) pursuant to the Appellate Court’s decision in the case of In re Marriage of Barneson (1999) 69 Cal.App.4th 583, a conveyance that is reasonably susceptible of more than one meaning does not meet the express declaration requirement; (4) here, the use of the word “grant” is ambiguous because it expresses Father’s intent to transfer an interest in the property, but does not specify what interest is being transferred; (5) the title Trust Transfer on the deed suggests that Father might have been transferring his community property interest to Mother to place into a trust without changing its characterization or ownership; and (6) without extrinsic evidence, which is prohibited, the interest that Father intended to transfer cannot be definitively determined. Therefore, the Appellate Court concludes that the Trust Transfer Deed was not a valid transmutation of Father’s interest in the property and thus, it reverses Trial Court’s decision.

 

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