A California Court of Appeals has ruled that a Trial Court made a mistake by determining that an interspousal transfer grant deed did not qualify as a transmutation agreement changing the character of a property from community property to separate property.
In the case of In Re Marriage Of Kushesh and Kushesh-Kaviani, Husband and Wife were married in January 2010, but separated two weeks after their only child was born in April 2011. In August 2011, Husband filed for divorce. One bone of contention in the divorce case was the characterization of a condo in Laguna Niguel acquired in May 2010. Evidence showed that the condo was three doors down from the condo in which the parties lived; it had a purchase price of $265,000; and it was purchased with a down-payment of $134,000. The deed to the condo was in Wife’s name as a Married Woman as Her Sole and Separate Property and the loan application and the loan were in Wife’s sole name. Moreover, on May 21, 2010, Husband signed an Interspousal Transfer Grant Deed (ITGD) stating that he granted the condo described therein to Wife as her sole and separate property.
In the divorce case, Wife and Husband both claimed the condo as their own separate property. At trial, testimony indicated that the down-payment for the condo had come from Wife’s fathers funds, but had been funneled from Kuwait through Husbands bank account. Trial Court found that the condo was presumed to be community property since it was acquired during the parties marriage and that the title presumption was of no concern. Trial Court further found that the ITGD did not contain the magic words that would make it a transmutation agreement (an agreement between married people that changes the character of a property from separate to community property or vice versa from community to separate property). Trial Court then ordered the condo sold, with Wife to receive reimbursement for her separate property contribution and the parties to equally divide the remaining proceeds. Wife appealed, and the Court of Appeals has now reversed the Trial Court and has remanded the case back to Trial Court for further proceedings.
The Appellate Court has ruled that (1) the ITGD does contain sufficient language to constitute a transmutation of Husbands interest in the condo to Wife (it says grant to convey title, interspousal means from spouse-to-spouse, and it specifically states that the transfer was to Wife as her sole and separate property); and (2) transfers from spouse to spouse are subject to rebuttable presumption of undue influence. The Appellate Court has ruled that ITGD validly transmuted the condo to Wife as her separate property. Thus, the Appellate Court has reversed and remanded the case back to Trial Court to determine whether Wife can rebut the presumption of undue influence in having Husband signing the ITGD.