Deeds – Another Case on Deeds, Another Case on Sharing (Appreciation Included)

In re Marriage of G.C. and R.W. (2018) 23 Cal.App.5th 1, certified for partial publication, really challenges your cerebral cortex and highlights the complexity of modern-day divorce cases. Its also begs for a timeline, and a map:

  • 2002 – husband and husband purchase a residence together in New Jersey.
  • 2004 – they enter into a New Jersey domestic partnership.
  • 2006 – they move from New Jersey to New York.
  • 2009 – they marry in Connecticut.
  • 2011 – they purchase a home in California and move to California.
  • 2012 – husband known as “G.C.” files for divorce in California.

So many questions. First, when were they married? The trial court found the date of marriage to be in 2009 because “their 2004 New Jersey domestic partnership was not ‘substantially equivalent’ to a California domestic partnership.” (G.C. and R.W., supra, 23 Cal.App.5th at p. 6.) The trial court’s ruling on this issue was upheld. The appellate court stated “our conclusion that the 2004 New Jersey domestic partnership is not ‘substantially equivalent’ (§299.2) to a California domestic partnership for purposes of dissolution is grounded on the fact that the New Jersey domestic partnership does not confer substantively similar legal rights and benefits to a domestic partnership formed under the Act, not the fact that the two states differ with respect to their recognition of community property principles.” (id. at p.15.) My mind was blown away by the depth of the analysis done by the appellate court on this issue, but even more blown away by its analysis of the next issue.

Second question, who gets what in the division of the California house? While the trial court got the domestic partnership ruling right, the appellate did not uphold its ruling on the division of this house. But, in all fairness, I like the trial court’s analysis of the issue. The trial court was correct in ruling that the marital residence was community property because it was acquired during marriage by the parties as joint tenants. (G.C. and R.W., supra, 23 Cal.App.5th at p. 19.) Where things began to go south was in the trial court’s analysis of the separate property interest. Again, another break-down, literally and figuratively (depending on which side you are on), is in order:

  • The parties purchased the California property for $395,000.
  • They made a $151,000 down payment.
  • W. contributed $23, 028 in separate property funds toward the down payment.
  • C. contributed $112, 431.47 in separate property funds toward the down payment.
  • The community took out a loan for $250,000.
  • The fair market value at the time of trial was $510,000, which included gross distributable equity in the amount of $265, 411. 01.
  • 2012 the parties refinanced, the mortgage on the marital residence was placed in G.C’s name, but title remained joint.

The trial court concluded that “the parties had separate property interests in the appreciation in  the value of the marital residence, in amounts proportional to their separate property contributions to the down payment.” (G.C. and R.W., supra, 23 Cal.App.5th at p. 6.)This was the wrong conclusion because the trial court found that the parties acquired the property as joint tenants during marriage but there was no “evidence in the record of a writing sufficient to rebut the presumption set forth in [family code] section 2581.” Therefore, neither party retained a separate property interest in the residence and the trial court erred in awarding a party an amount that represents the amount of capital appreciation attributable to the separate funds. (id. at p. 23.) The appellate court held, and I must fully cite this because the analysis is so great:

In the absence of a rebuttal of the [family code] section 2581 presumption, the court was required to find that the marital residence was community property. G.C. and R.W. were each entitled to reimbursement pursuant to [family code] section 2640 for their separate property contributions to the acquisition of the residence. However, reimbursement awarded pursuant to section 2640 may not include any amounts attributable to appreciation. Therefore, on remand, the trial court shall divide the value of the appreciation of the marital residence evenly, as a community asset.

(ibid.)

So, the trial court included reimbursement for the separate property contributions AND the associated appreciation, and the appellate court said “no,” absent a writing to the contrary each party gets only their separate property amount reimbursed pursuant to the California family code. This is in addition to their one-half of the community property interest, so, all was not lost. However, we can see how G.C. might be angry with this ruling as he did not get appreciation on his separate property down payment congruent with this payment. A fair decision? I do not know. One way to prevent this from happening to you is to do pre-divorce planning in the middle of your marriage and execute an agreement modifying the law to your favor; but, what’s the point of being married if you are planning for a divorce? And, would your spouse really sign such a thing? The bottom line, if the facts in your case match the facts in this case you may get your separate property down payment reimbursed and you may share on a 50/50 basis the appreciation in the real property no matter how much you put down relative to your spouse’s contribution.

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