How “Transmutation” Can Affect The Status Of Community Property In A California Divorce

In a California divorce case, the court starts with a presumption that any property owned by either spouse is separate property, and any property acquired during the marriage is community property (unless the property was made to one spouse by gift or inheritance). This presumption may be overcome, however, in a number of ways. For instance, if a couple signs a premarital agreement stating certain property will be treated as either separate or community, that agreement would override the normal presumption.

It is also possible for property to change status from separate to community, and vice versa, through a legal process known as transmutation. A transmutation must conform to certain requirements spelled out in California law. A judge must also consider whether a transmutation was the result of fraud, undue influence, or other wrongdoing. The court must also determine whether the other spouse is entitled to any reimbursement for their financial contributions to the property in question.

Court: Wife’s Signature on Deed Granting Property to Husband Was Not Coerced

A recent decision from the California Fourth District Court of Appeals, Garr v. Schmorleitz-Garr, provides a helpful illustration of how transmutation works in practice. The husband and wife in this case married in 2016. Less than two years later, in 2018, the husband filed for divorce. A California judge subsequently held a three-day trial to resolve outstanding issues, including the division of property.

Shortly before the couple separated, they purchased a piece of real estate known as Starlight Way. But according to the deed, the husband was listed as the sole mortgagee on the property. And the deed itself identified the husband as a “married man” taking ownership “as his sole and separate property.” The wife also signed an “interspousal grant deed” granting the property to the husband as his sole and separate property.

Under the circumstances, the trial court held the property was transmuted from community property to the husband’s sole property. The wife appealed that determination. She argued that she was forced to sign the deed under duress in order to obtain the mortgage and that the husband had committed acts of domestic violence against her. The Court of Appeals said that the wife’s testimony alone was insufficient to set aside the trial court’s findings, however, as the judge was allowed to disbelieve her account of events.

More to the point, the appeals court cited other parts of the wife’s testimony that supported the trial judge’s finding of transmutation. For instance, the wife admitted she had bad credit and that her husband was primarily responsible for negotiating the purchase of the Starlight Way property. The court said that was enough to show the wife’s actions were voluntary and not the result of any coercion.

Contact a San Jose Divorce Lawyer Today

Legal questions involving community property are often more complicated than many divorcing couples initially realize. An experienced San Jose community property attorney can walk you through these issues and advise you of your rights under the law. If you need to speak with a qualified divorce lawyer, contact Foster Hsu, LLP today to schedule a consultation.