California Court Holds Husband’s Separate Property Contributions Remain His in Divorce

red-symbols-1-1237216 (1).jpgOne of the biggest issues in divorce that tends to affect the parties’ relative financial positions going forward is the identification and division of marital property. Determining what is separate rather than community property can become quite complicated. Consider that in many cases, as people are getting married later in life, each party may bring to the marriage an assortment of separate assets and debts. Upon marriage, the question of what happens to each person’s separate property is not necessarily clear. Much depends on the explicit actions and declarations of the parties. If you are considering a divorce, it is extremely important that you assess the state of your marital and separate property as early in the process as possible. In order to effectively address these issues, you are encouraged to contact a local San Diego family law attorney.

In divorce proceedings, parties often are unable to come to an agreement as to the character of certain assets and debts. When this occurs, courts have the authority to step in to identify and divide the marital property. In a recent California divorce case, the court of appeals was asked to decide whether the husband had “transmuted” his separate property to community property, for purposes of asset and debt distribution. There are state laws that address this very situation and must be analyzed to determine the appropriate outcome in each case.

For one, California Code Section 852 provides (in pertinent part) that “a transmutation of real or personal property is not valid unless made in writing by an express declaration that is made, joined in, consented to, or accepted by the spouse whose interest in the property is adversely affected.” In this case, the couple’s family home was purchased during their marriage, but with a down payment from the husband’s separate property funds, as well as from the proceeds of a loan in the husband’s name alone. The husband took title to the property solely, as his separate property, in his name, and as a married man. Almost a year and a half later, the husband sold a separate property and used the proceeds to retire the loan on the new home. The wife moved out a few years later.

During their divorce proceeding, the trial court deemed the family home to be community property and awarded (among other things) reimbursement of the husband’s separate property contributions under Section 2640 of the California Family Code. The husband appealed, arguing that there was no evidence that he transmuted his separate property to community property and that the court should have awarded him property interests proportionate to his contributions to the equity in the home.

The court of appeals conducted a thorough examination of the intent and interplay of both Section 852 and Section 2640, examining the history and purpose of these provisions. The court concluded that if property is acquired during the marriage – as it was here – with separate and community funds, the transmutation provisions of Section 852 must be established before the reimbursement provisions of Section 2640 come into play.

Since the documents failed to contain an express transmutation of the husband’s separate property, his separate contributions retained the characterization as his separate property, and therefore he held a property interest in the family home that was proportionate to the separate funds that he contributed. While the facts and legal analysis may seem quite complicated, an experienced family law attorney would be able to determine whether the law established in this case could apply to the facts of your divorce case. Roy M. Doppelt has been representing parties involved in family law disputes for more than 20 years. Doppelt & Forney serves clients throughout Southern California, including San Diego, Encinitas, La Jolla, and Chula Vista. For a free consultation, contact Doppelt & Forney through our website, or give us a call toll-free at (800) ROY IS IT (769-4748).

Related Blog Posts:

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California Court Reviews State Laws Affecting “Transmutation” of Separate Property in Divorce