Articles Posted in Property Division

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It’s important for spouses getting divorced to understand that the process is a legal matter that happens through the court system. As a recent case out of California’s Sixth District makes clear, judges take that process seriously. They’re not likely to take kindly to a spouse who disregards orders and tries to subvert the process.

houseHusband and Wife divorced in 2007, roughly two years after the couple first filed to dissolve their marriage. In the following year, a court found that the couple’s family home should be treated as community property and ordered that it be sold. California law generally treats any property obtained by one spouse during the course of a marriage as community property to be divided evenly in the event of divorce. In many cases, that means that the spouses must sell the property and divide the proceeds.

The court also hit Wife with more than $100,000 in sanctions for her “failure to cooperate in the disposition of the family residence, the principal asset of this community.” When the house still wasn’t sold in 2012, a judge again ordered Wife to help facilitate the sale. By that time, however, she had already transferred the property to an LLC owned by Wife and her new boyfriend. The company issued an eviction notice to Husband. It later filed paperwork listing Husband and Wife’s son as the company’s CEO.

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Generally, divorcing spouses are supposed to split their home and other community property under California law. When one spouse lives in the home alone after the couple separates and before they’re officially divorced, however, he or she may need to compensate the other spouse for the exclusive use of the property. These so-called “Watts” credits were the subject of a recent case in California’s Second District Court of Appeals.

for rent signHusband and Wife separated in 2013, following some 30 years of marriage. Wife lived alone in the family home for nearly two years following the separation and through the course of a heated trial. A trial judge eventually awarded the home to Husband and ordered Wife to leave the property. In exchange, Husband was ordered to pay Wife nearly $260,000 for her share of the home. The court reduced that amount by $145,000, which it said was the value of her exclusive use of the home for the time that Wife lived there alone after the split.

The trial court also said that Husband should be credited for the more than $11,000 in loan payments on the home that he made after the separation. That compensation is what California courts call an “Epstein” credit.

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The family home is often a source of much debate in California divorce cases. State law generally treats real estate obtained by one or both spouses during the marriage as community property to be divided equally upon divorce. Spouses have the power, however, to make their own arrangements via settlement agreements. Courts also have significant authority to enforce those agreements, including by forcing the sale of a home. California’s Second District Court of Appeals recently took up one of those cases.house

Wife filed for  divorce from Husband in September 2010, following 11 years of marriage. She’d purchased a $640,000 home during the marriage. Typically, that home would be considered community property to be split evenly between the spouses in the event of divorce. As part of a marital settlement agreement, however, Wife agreed to give Husband the property. She signed a quitclaim deed transferring the property to Husband and agreed to pay him $2,500 a month in arrearages on the home mortgage. Husband was responsible for removing Wife’s name from the mortgage, making the monthly mortgage payments, and paying property taxes. The agreement also stated that both parties intended for the home to be sold.

A trial court granted the divorce and ordered the former spouses to abide by the terms of the agreement.

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If you’ve previously read this blog, you may already know that California is a community property state. That means any property obtained by one or both spouses during the course of a marriage is generally split between them upon divorce. Things can get a little tricky, however, when one spouse takes property out of the state while living outside California. The state’s First District Court of Appeals recently explained the rules of the road for this kind of dispute.map

Husband and Wife had been married for roughly two decades when Wife moved from Iran to California in 1982. Husband said he would visit sporadically on 90-day tourist visas. The couple divorced in Nevada in 1987 but remarried in California five years later. Husband and Wife bought a home in Lafayette in the time between the two weddings, and Husband visited Wife in the U.S. for months at a time with tourist visas. Wife filed for divorce a second time in 1993. Wife obtained a default judgment of divorce from a California court after she explained that Husband was in the Middle East, and she was unable to locate him.

Wife went back to court in 2012, this time asking a judge to set aside the divorce judgment and alleging that Husband had committed fraud and misappropriated assets in Iran. She said specifically that Husband transferred various real estate holdings abroad – which should have been shared by the former spouses as community property – in order to evade creditors. After a hearing on the issue, however, the trial court found that Wife didn’t show that Husband was actually living in California during the marriage. As a result, the court said it didn’t have the authority to divide out-of-state property obtained by Husband during that time.

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Divorce proceedings are much like other types of litigation. As in other cases, divorcing spouses are required to provide each other with certain information during the course of the proceedings in order to make sure that each side knows what they are getting into. State law allows a judge to go back and undo a ruling if he or she finds that a spouse has withheld information about their income and assets or otherwise committed fraud. California’s Second District Court of Appeals recently took on a case involving this type of fraud allegation.

wedding ringWife filed for divorce from Husband in 2012, following some 24 years of marriage. The spouses entered into a marital settlement agreement, resolving how their property would be divided and waiving their rights to spousal support. Husband later opposed Wife’s request that the divorce court enter a judgment adopting the terms of the agreement. He argued that his attorney didn’t let him read the agreement and that the lawyer incorrectly told him that he wasn’t entitled to spousal support. The court eventually sided with Wife, adopting the agreement. Wife was awarded one of the couple’s homes, and Husband was awarded the other. He was also ordered to pay Wife $12,000 to make up the difference in value of the two properties.

Husband later asked the same court to set aside the decision, claiming that Wife had secured the agreement by fraud. He said in particular that Wife had hidden two vehicles that should have been considered the couple’s community property, didn’t disclose that she had been renting one of the properties to a tenant, and misrepresented the couple’s community interest in Wife’s 401k retirement savings account. The court declined Husband’s request, finding that it wasn’t filed within the six-month deadline provided by California law.

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California divorce cases involve a wide range of rules about how, when, and where the case is litigated. These include limits on when a person can appeal a decision that he or she doesn’t like. If you don’t play by those rules, you risk harming or even losing your case. That’s the main takeaway from a recent decision by California’s Fourth District Court of Appeals. The Court said a former spouse who appeared to have evidence showing that she was entitled to part of the family home simply raised her arguments just a little too late.

houseHusband bought a house in Pasadena in 1997, about six years before he married Wife. When Wife and he divorced in 2011, a court awarded Husband the home as his sole property. As the Court explained, California law generally treats all property obtained by a spouse prior to a marriage as that spouse’s separate property. All assets gained by one or both spouses during the marriage, on the other hand, are considered community property to be split between the spouses in the event of a divorce.

Wife didn’t appeal the trial court’s decision within the proscribed time limits. Instead, she filed a request for relief from the court’s order, in which she argued that a hearing on the property issue had been fraudulent. The trial court denied the motion, and Wife appealed that decision. Wife presented for the first time on appeal a 2003 grant deed showing that Husband had transferred the house to Wife and himself as joint tenants. She said she didn’t realize that she was still a joint tenant on the property until after Husband died in 2014.

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Settlement agreements are often an efficient way for spouses divorcing in California to resolve some of the issues related to the split without leaving them to the whims of a local judge. These agreements are binding, legal contracts that are treated by courts as such. That’s the main takeaway from a recent decision out of California’s Fourth District Court of Appeals, in which the Court resolved a dispute over stock shares.

paperworkHusband filed for divorce from Wife in May 2010, following nearly 30 years of marriage. During a month-long trial, Husband argued that three transfers of stock from a company called AVD were gifts from his father that should be considered separate property. The trial judge appeared to be ready to side with Husband, but the parties reached a settlement agreement shortly before that ruling. Husband’s lawyer wrote out the initial agreement by hand. It stated that Wife would get 390,000 shares of AVD stock and that the remaining 884,000 shares would go to Husband.

When Wife said she couldn’t read the agreement, her lawyer wrote out a second version of the deal. The second stipulated agreement also allotted 390,000 shares to Wife but only 553,000 shares to Husband. A trial court eventually weighed in after a dispute over who would get the more than 300,000 shares unaccounted for in the second stipulation. It held that Wife was entitled to 390,000 shares and that the remaining 884,000 shares should go to Husband.

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Under California’s property division system, all of the property that a couple brings to a marriage is considered separate. That means the spouse who owns the property at the time of the marriage keeps the property in the event of divorce. The same goes for any property obtained using separate funds. All other property obtained during the course of the marriage, on the other hand, is community property to be split evenly upon divorce. So what happens when one spouse uses separate money to buy real property and then uses community funds to improve it? The state’s Sixth District Court of Appeals recently took on that issue.

wedding ringHusband and Wife separated in September 2008, following roughly 37 years of marriage. The couple purchased a home in Gilroy for $275,000 a year after they married, using $75,000 from Wife as a down payment. They also used Wife’s separate trust account for a $20,000 payment on the loan that they obtained for the rest of the purchase price. The couple later bought a parcel of land next to the property for another $64,000 from Wife’s separate money. They made various improvements to the land, including building a large home with a pool and basketball and tennis courts. They also remodeled the new home several times.

Both properties – collectively called “the Redwood Retreat Ranch” – remained in Wife’s name alone until 2005, when ownership was transferred to Husband and Wife jointly. During the divorce proceedings, the couple argued over the value of the property and the various improvements. A court heard testimony from several experts and eventually determined that the property was worth more than $5.4 million. The judge also said Wife adequately showed that she used separate money from her trust fund to pay for about 47 percent of the property through down payments and mortgage payments. The remaining 53 percent was community property, according to the court, to be split evenly among the spouses.

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What to do with the family house is one of the most common questions in California divorce cases. There are also a number of related issues to consider, including what to do when one spouse stays in the home after a couple splits but before they resolve how the property will be divided. As the state’s Third District Court of Appeals recently explained, the spouse who stays in the house might be responsible to pay fair market rent, and the spouse who leaves could be on the hook for mortgage and maintenance obligations.

houseHusband filed for divorce from Wife in Hawaii in 2005, and Wife filed a separate divorce action in California the following year. The couple had originally lived in Elk Grove, but they physically separated when Husband was moved around the country as part of his military service. Wife continued to live in their Elk Grove home after they officially separated in 2004. The Hawaii case was eventually dismissed, and the spouses entered into an agreement awarding the Elk Grove home to Wife in 2012.

The former couple asked a court to decide, however, whether Wife should be required to pay one-half of the house’s fair market rent (“Watts charges”) to Husband for the eight or so years that she lived there after they separated and before they entered into the agreement. It also asked the judge to determine whether Husband should reimburse Wife for half of the $72,000 that Wife said she sunk into the property in mortgage payments, maintenance, and repairs during the same time (“Epstein charges”). The judge ordered Husband to compensate Wife for the mortgage, maintenance, and repairs, but denied Husband’s request for rental value reimbursement.

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California’s community property system generally works like this. Any property that you bring with you to a marriage is separate, and any property obtained by you or your spouse during the marriage is community property. The second category of assets usually gets split evenly between the spouses in the event of a divorce. There are some situations, however, in which separate property may become community property. These include when spouses execute documents changing the legal ownership of a home, for instance.

house-1172352 (1)The state’s Fourth District Court of Appeals recently explained that sometimes that type of change still isn’t enough. This case is also a good example of the perils that face a person who tries to navigate the divorce courts without the representation of an experienced family law lawyer.

Husband and Wife were married for only 11 months before separating in 2012. Husband, a military officer, was deployed for seven of those months. Husband filed for divorce in February 2012, asking a court to treat his savings account and a property in Temecula obtained before the marriage as his separate property. He explained that he’d executed a power of attorney in favor of Wife before shipping off from San Diego. Husband said Wife used that power to change the title to the property so that the residence was their joint property rather than his sole property. Husband also said Wife drained $20,000 from his bank account – money he had accumulated before the marriage – after she asked for a divorce.

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