{"id":1747,"date":"2020-07-23T21:11:15","date_gmt":"2020-07-23T21:11:15","guid":{"rendered":"http:\/\/www.westcoastbk.com\/blog\/?p=1747"},"modified":"2020-07-23T21:16:06","modified_gmt":"2020-07-23T21:16:06","slug":"california-supreme-court-holds-community-property-presumption-wins-versus-recorded-title-presumption","status":"publish","type":"post","link":"https:\/\/www.westcoastbk.com\/blog\/2020\/07\/california-supreme-court-holds-community-property-presumption-wins-versus-recorded-title-presumption\/","title":{"rendered":"California Supreme Court Holds Community Property Presumption Wins Versus Recorded Title Presumption"},"content":{"rendered":"\n

By Ryan C. Wood<\/a><\/p>\n\n\n\n

I have been writing about the community property presumption versus the recorded title presumption for years now as applicable to filing bankruptcy.\u00a0 We finally have the law interpreted by the California Supreme Court to put an end to certain arguments.\u00a0 That is unless the legislature decides to weigh in and change the law that was interpreted.\u00a0 I would like to thank all of the bankruptcy attorneys<\/a> that fought for individual rights and the rights of how people chose to take title when purchasing real property during marriage.\u00a0 Unfortunately I could see the future and knew the community property presumption would win the argument. <\/p>\n\n\n\n

The California Supreme Court issued its opinion today in In re Brace. The entire opinion for In re Clifford Brace, Case No. S252473 can be found at:<\/p>\n\n\n\n

In re Clifford Brace S252473 Opinion<\/a><\/p>\n\n\n\n

The California Supreme Court held:<\/p>\n\n\n\n

  1. Evidence Code section 662 does not apply\nwhen it conflicts with the Family Code section 760 community property\npresumption.<\/li>
  2. When a married couple uses community\nfunds to acquire property with joint tenancy title on or after January 1, 1975,\nthe property is presumptively community property under Family Code section 760\nin a dispute between the couple and a bankruptcy trustee.<\/li>
  3. Under Family Code Section 852, joint\ntenancy titling of property acquired by spouses using community funds on or\nafter January 1, 1985 is not sufficient by itself to transmute community\nproperty into separate property.<\/li><\/ol>\n\n\n\n

    So that is the trifecta of slamming the door on filing a bankruptcy petition and only listing half the value of the bankruptcy filers real property purchased during marriage and title taken as joint tenants.\u00a0 I can hear the collective bankruptcy attorney<\/a> groan for those that care.<\/p>\n\n\n\n

    UNLESS the community property presumption can be\nrebutted\u2026\u2026\u2026\u2026 Good luck with that given the notarized, signed and recorded title\nalone is not enough.  What more is\nneeded?  <\/p>\n\n\n\n

    I do not like this opinion as it relates to my\nbankruptcy clients and their ability to discharge their debts under the Federal\nBankruptcy Code.  I do believe this\ndecision ultimately helps to do as the California Supreme Court provides on\nPage 25: \u201cSeeking to curb the risk of fraud, undue influence, and litigation\narising from informal agreements between spouses that purported to change the\ncharacter of property, the Legislature enacted our present-day transmutation\nstatutes.\u201d  <\/p>\n\n\n\n

    I do believe the intent of this holding is for good;\nthat spouses to be treated equally when it comes to property rights under\nCalifornia Law; which has not always been the case regarding women\u2019s rights to\nown property and exercise their rights regarding their property.  I am all for equally bad or equally good\ntreatment for all.  What people do not\nget is that your bad treatment is actually the same for everyone, so it is for\nall purposes equal.<\/p>\n\n\n\n

    The opinion by the California Supreme Court assumes\nyou do not know what you are doing when purchasing a house during marriage and\ntaking the title as joint tenants.  There\nlimitless examples of circumstances in life that you must be bound by your\nchoice.  You mark yes on a test and the\ncorrect answer is no and that is that. \nYou got the question wrong.  It is\nso fair, simple and consistent.  Every\ntime an analysis of the circumstance is interpreted it is a binary result, a\n\u201c1\u201d or a \u201c0.\u201d  Why is taking title as\njoint tenants not the same analysis?  Why\nis it made more complicated?  Why are the\npurchasers of the property during marriage in California not bound by their\nchosen taking of title good or bad for them? \n  <\/p>\n\n\n\n

    Interpretation\nof Law Assumes You Do Not Know What You Are Doing<\/strong>   <\/p>\n\n\n\n

    I will try and keep this a vanilla as possible, but\nyou need to be protected from yourself whether you agree or not.  This is what law does.  It does keep us safe and does a pretty good\njob doing it.  From having a safe food\nsupply to forcing you to wear a seatbelt the law is keeping you safe and saving\nyou from yourself. <\/p>\n\n\n\n

    So too is the interpretation of law and the\ncommunity property presumption versus the recorded title presumption.  If you are married and purchasing the real\nproperty with community funds then why would the purchase of the house create\ntwo separate property interests? \nCommunity funds were used for the down payment and for the mortgage\npayments, property taxes, maintenance and insurance so the character of the\nproperty naturally has to be community property upon divorce or death.  What about when filing for bankruptcy?<\/p>\n\n\n\n

    The\nCommunity Presumption Can Be Rebutted<\/strong><\/p>\n\n\n\n

    This is nothing new. \nPersonally I think a notarized, signed and recorded deed saying the\nproperty is held as joint tenants should all that is necessary to rebut the\npresumption that the property is community property.  Of course this would be good for the two\nhumans that are married and took title as joint tenants when filing for\nbankruptcy so naturally that cannot be correct. \nWhat more is needed to rebut the presumption?  <\/p>\n\n\n\n

    Interpretation\nof Family Code Section 852 Simply Does Not Exist<\/strong><\/p>\n\n\n\n

    Call me crazy but I take a holistic view the\ninterpreting the law and the world.  The\nway California Family Code Section 852 is interpreted drives me crazy.  I have this issue with all kinds of laws and\nrules for this type of interpretation. \nThis is not an issue of which came first, the chicken or the egg?  The issue is condition precedent.  A contract law reference to an event or state\nof affairs that is required before something else will occur. In contract law,\na condition precedent is\nan event which must occur, unless its non-occurrence is excused, before\nperformance under a contract becomes due, i.e., before any contractual duty\nexists.<\/p>\n\n\n\n

    For example here in the Northern District of\nCalifornia the United States Bankruptcy Court has General Order No. 32.  This rule is about how pay statements for the\n60 days prior to the bankruptcy case being filed must be turned over to the\ntrustee assigned to the case and not filed with the Court.  General Order No. 32 also provides procedure\nto be followed if the pay statements cannot be provided and to explain why and\nestimate the gross income and net income in lieu of providing the actual pay\nstatements.  The condition precedent to\nGeneral Rule No. 32 being applicable is the existence of W-2 income resulting\nin the issuance of pay statements.  If a\nperson is not employed or self-employed THERE ARE NO PAY STATEMENTS TO PROVIDE\nAND NO PAY STATEMENTE EVER EXISTED TO PROVIDE. \nNo part of General Order No. 32 addresses the nonexistence of pay\nstatements yet over and over again I have various parties telling me we have to\nprovide a declaration providing there are no pay statements to provide pursuant\nto General Order No. 32.  No, no and no.<\/p>\n\n\n\n

    The same is true regarding the interpretation of\nCalifornia Family Code Section 852. \nThere is a condition precedent to transmuting an asset from community\nproperty to separate property or separate property to community property.  That condition precedent is the actual\ntemporal existence of the character of the property first then that asset is by\nwriting is characterized as the spouses property in a different way; community\nor separate.  How can that happen when\nthe real property in question was purchased during marriage and the title was\ntaken as joint tenants?  When was the\nhouse ever titled or characterized as community property for it to be then transmuted\nbetween spouses as separate property?  IT\nWAS PURCAHSED AS SEPARATE PROPERTY AS EVIDENCED BY THE NOTARIZED, SIGNED AND\nRECORDED TITLE.  You say what if down\npayment for the house was community property to begin?  I say what if the down payment was the\nseparate property of one spouse?  Great,\nI say trace back where the money came from to purchase the house, but please\nstart with recognizing the notarized, signed and recorded title as the starting\npoint given that really exists in reality. \nDo not start with a legal fiction, a presumption created to change\nreality.  This is also not a\ndivorce.  It is a bankruptcy filing in\nwhich only the filing spouses community assets are liable to community\ndebts.    <\/p>\n\n\n\n

    The California Supreme Court says we do not care\nwhat the title says either way given the house was purchased by a married\ncouple during marriage so you all better have some sort of writing to let\neveryone know how you want this property treated upon divorce, death and the\nfiling of bankruptcy.  Okay, how\nromantic.  Maybe this is why over 50% of\nmarriages fail.  All marital transactions\nmust be memorialized in writing throughout the marriage to provide evidence of\nthe spouses intent play by play to overcome various presumptions that many\nmarried couples have no idea exist until there is a problem.   <\/p>\n\n\n\n

    CA\nFamily Code Section 852<\/strong><\/p>\n\n\n\n

    (a) A transmutation of real or personal property is not valid\nunless made in writing by an express declaration that is made, joined in,\nconsented to, or accepted by the spouse whose interest in the property is adversely\naffected.<\/p>\n\n\n\n

    (b) A transmutation of real property is not effective as to\nthird parties without notice thereof unless recorded.<\/p>\n\n\n\n

    (c) This section does not apply to a gift between the spouses of\nclothing, wearing apparel, jewelry, or other tangible articles of a personal\nnature that is used solely or principally by the spouse to whom the gift is\nmade and that is not substantial in value taking into account the circumstances\nof the marriage.<\/p>\n\n\n\n

    CA\nFamily Code Section 760<\/strong><\/p>\n\n\n\n

    Community Property: Except as otherwise\nprovided by statute<\/strong>, all property, real or personal, wherever\nsituated, acquired by a married person during the marriage while domiciled in\nthis state is community property.<\/p>\n\n\n\n

    CA\nFamily Code Section 2581<\/strong>         <\/p>\n\n\n\n

    For the purpose of division of property on dissolution\nof marriage or legal separation of the parties, property acquired by the\nparties during marriage in joint form, including property held in tenancy in\ncommon, joint tenancy, or tenancy by the entirety, or as community property, is\npresumed to be community property. This presumption is a presumption affecting\nthe burden of proof and may be rebutted by either of the following:<\/p>\n\n\n\n

    (a) A clear statement in the deed or other\ndocumentary evidence of title by which the property is acquired that the\nproperty is separate property and not community property.<\/p>\n\n\n\n

    (b) Proof that the parties have made a written\nagreement that the property is separate property.<\/p>\n\n\n\n

    CA Evidence Code Section 662<\/strong><\/strong><\/p>\n\n\n\n

    The owner of the legal title to property is presumed\nto be the owner of the full beneficial title. This presumption may be rebutted\nonly by clear and convincing proof.<\/p>\n","protected":false},"excerpt":{"rendered":"

    By Ryan C. Wood I have been writing about the community property presumption versus the recorded title presumption for years now as applicable to filing bankruptcy.\u00a0 We finally have the law interpreted by the California Supreme Court to put an end to certain arguments.\u00a0 That is unless the legislature decides to weigh in and change […]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":[],"categories":[367,311,1],"tags":[376,375,369,309,374,368],"_links":{"self":[{"href":"https:\/\/www.westcoastbk.com\/blog\/wp-json\/wp\/v2\/posts\/1747"}],"collection":[{"href":"https:\/\/www.westcoastbk.com\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.westcoastbk.com\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.westcoastbk.com\/blog\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/www.westcoastbk.com\/blog\/wp-json\/wp\/v2\/comments?post=1747"}],"version-history":[{"count":2,"href":"https:\/\/www.westcoastbk.com\/blog\/wp-json\/wp\/v2\/posts\/1747\/revisions"}],"predecessor-version":[{"id":1749,"href":"https:\/\/www.westcoastbk.com\/blog\/wp-json\/wp\/v2\/posts\/1747\/revisions\/1749"}],"wp:attachment":[{"href":"https:\/\/www.westcoastbk.com\/blog\/wp-json\/wp\/v2\/media?parent=1747"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.westcoastbk.com\/blog\/wp-json\/wp\/v2\/categories?post=1747"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.westcoastbk.com\/blog\/wp-json\/wp\/v2\/tags?post=1747"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}