MARRIED PERSONS ACQUIRING TITLE BEWARE! THERE IS A DIFFERENCE BETWEEN THE VARIOUS METHODS OF TAKING JOINT TITLE WITH CONSEQUENCES OF EACH. WHY IS THIS IMPORTANT?
If you are considering buying property with your spouse or partner, the language in the deed is critical to determining whether and what kind of joint ownership it is. Trugman Law Group, APC has years of experience serving as a trusted family law counsel in property acquisition questions regarding determining the characterization of property ownership interests. If after reading this article, you have questions, feel free to contact our offices for a free consultation as shown below.
The California Supreme Court recently ruled in re Brace (2020) 9 Cal.5th 903 that for property purchased during marriage by a married couple or one of them, the Family Code creates a rebuttable presumption the property is community property, even if the deed lists it as “joint tenancy”, “tenancy in common” or in only one party’s name. Joint tenants typically have separate interests in the property. Title and escrow officers are generally not lawyers and probably do not have the educational background to determine the style of the recorded title. The parties purchasing the property generally do not have the educational background to determine the style of the record title. The Brace court observed that husbands and wives take property in joint tenancy without legal counsel but primarily because deeds prepared by real estate brokers , escrow companies, and by title companies are usually presented to the parties in joint tenancy form.
The result is that they don’t know what joint tenancy is, that they think it is community property and then find out upon death or divorce that they don’t have what they thought they had all along. How do parties in a case-by-case purchase intent the property to be held and the “survivor’s” rights to that property should be reviewed with an experienced family law attorney before accepting the deed prepared by escrow or others. The Family Code provides some guidance on how the character title to the property can be changed by a “transmutation.” The Court in Brace explaining “nothing in our decision precludes spouses from holding separate property as joint tenants or from transmutting community property held in joint tenancy as long as the applicable transmutation requirements are met. The Brace case arose in the bankruptcy court in which the issue was whether property held in joint tenancy by a married couple, where only one of the parties filed for protection in the bankruptcy court was in the estate of the bankruptcy party in whole or in part. In other words, could creditors claim enforcement against the entire property on only one’s share. The California Supreme Court was asked in the Marriage of Brace case to determine whether the form of title (Evidence Code §662) or the community presumption (family Code § 760) as to property acquired during marriage determines the ownership. A similar question arose in the California Supreme Court Marriage of Valli case. Whether a creditor can get at this property and if so, how much of it.
Why is this Important?
One reason is that Family Code §910(a) provides the “community estate is liable for a debt incurred by either spouse before or during the marriage regardless of which spouse has the management and control of the property, and regardless of whether one or both parties to the debt or to a judgment for the debt “unless a statute expressly provides otherwise, and then the form of title, rather than to community property presumption controls at death. Prob. C. §210-212. Of Course the other reason is in divorce proceeding, the court is asked to divide community property and must determine if any of the property is separate property. The question becomes “is this community property?” The question has come up in practically every divorce and legal separation case I have handled over the years. Trugman Law Group, APC has the experience in handling these types of issues.
Therefore, needless to say that to carry out the intentions of the parties at the time property and before the deed is finalized and recorded, experienced family law counsel should be consulted to discuss and determine the language in the deed and whether any additional written agreement between the parties needs to be prepared, executed and recorded.