It’s a common scenario dealt with in divorce cases in which one party signed a quitclaim to the other party during the marriage, for the purpose of refinancing an item of property (usually a residence). Either they are told by the refinancing spouse that they will go back on title after the refinance, or it is merely assumed since both parties were on title before. I’m going to tell you a secret – one that is potentially worth hundreds of thousands, or even millions of dollars:
Never assume and never trust!
I know, not very romantic, right? Get over it! It’s not romantic to be taken advantage of either, yet family law attorneys see the above scenario regularly. We are tasked with the difficult and expensive job of trying to fix YOUR mistake, which often requires a trial for the court to decide if the quitclaimed house is community property or separate property. Family law trials in California are expensive!
So the applicable code sections in California are these:
married person during the marriage while domiciled in this state is community property.
Okay, that sounds good so far, right? But wait…
Family Code section 852 states: (a) 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.
The word “transmutation” essentially means “transfer.” In plain language, it takes a written document to transfer ownership from one spouse to another. But what is a quitclaim? It’s a written document that plainly states on its face that you are quitclaiming any interest you have in that property to the other person.
Evidence Code section 662 states: The owner of the legal title to property is presumed
to be the owner of the full beneficial title. This presumption may be rebutted only by clear and convincing proof.
To overcome the “form of title presumption,” the evidence of a contrary agreement or understanding must be ‘clear and convincing. A person cannot overcome the title presumption by claiming that title was taken in a particular form in order to obtain a loan. (In re Marriage of Brooks, 169 Cal. App.4th at 190 and In re Marriage of Fossum, 192 Cal. App. 4th 336, 345 n.5 (2011)).
What this means in plain English is that, if -- during a refinance or any other time during marriage for any reason at all -- you sign a quitclaim that gives your spouse full title, it doesn’t much matter why you did that, you’re probably going to lose out on that asset as you have “given it” to your spouse.
So how should you handle a spouse’s request to sign a quitclaim deed? Here are a few ideas:
First: Never, ever, ever, allow someone to put time pressure on you! People rarely make good decisions under pressure.
Second: Whatever document you are being asked to sign should be taken to an attorney for a ½ hour or 1 hour consultation so that you can fully understand the ramifications of signing it. To understand the consequences of signing such document to your marital estate, see a family law attorney. It is well worth paying a small consultation fee to make sure that you do not lose out on valuable property.
Third: Have a written, signed and notarized deed drafted and signed at the same time as a quitclaim deed that puts you back on title. Then, make sure that either the escrow company or YOU, as the affected party, retains possession of that deed until it is safely recorded. Do not store this deed anywhere where your spouse can intercept it. This deed that puts you back on title would be recorded once the refinance is complete. Note: You should do your due diligence to make sure that recording the second deed will not impact the new loan terms.
Fourth: If a second deed is not immediately possible for whatever reason, have a document drafted, signed and notarized (and store it in the same method as recommended above) that clearly states why you signed the quitclaim, that you are not transmuting your interest to the other spouse, you are simply cooperating with a refinance, and that the intention of both parties is to add you back to title after the refinance.
It’s romantic when spouses look out for the other’s interests. Protection and provision are romantic, not taking advantage of someone.
It’s sexy when a person operates from a place of intelligence, not blind trust. Show up in your marriage as a person who will make sure they have the information they need before they sign documents. Be intelligent, be self-protective, and get your questions answered by a professional, not your spouse.
If you need family law advice, I am happy to assist you. Call attorney Robin Grant at (949) 354-6466. I can schedule a consultation duration that will fit your budget.
The information provided in this article does not, and is not intended to, constitute legal advice. All information, content and materials available on this site are for general informational purposes only.