All divorcing couples in California should carefully review titles to their real property to determine if it is community property or property owned as joint tenants. The difference between the two types of ownership may determine which spouse will receive the property if the other spouse dies before the divorce is final or who will get the property as part of the divorce settlement.
Community Property Overview
California is a community property state, so with few exceptions, all property acquired during the marriage is equally owned by both spouses. If one spouse purchases a home during the marriage, the home is owned as community property equally with the other spouse. Property purchased during the marriage with separate property, such as money received as a gift, will be considered separate property. If the couple divorces, the home owned as community property is usually sold and the proceeds divided equally. Another option is for one spouse to keep the house while the other receives assets equal to her share of the interest in the house. Either spouse may bequeath her share of the property in a will, while the other half of the property remains with the surviving spouse, unless the title of the property provides otherwise.
Read More: Difference Between Community Property With Rights of Survivorship vs. Joint Tenancy
Joint Tenancy Overview
Most community property in California is titled in joint tenancy, which means both spouses equally own the house and when one spouse dies, the other automatically receives complete ownership. You may also have community property with rights of survivorship, meaning that although the property is not titled in joint tenancy, the surviving spouse still automatically has complete ownership upon the death of the other spouse. But if a couple divorces and the ex-spouses still own the property as joint tenants, California law revokes the ex-spouse's right to receive the property after the other spouse dies. Instead, the divorce serves to change the joint tenancy title to tenancy in common so the surviving ex-spouse owns half the house, and the deceased spouse's heirs receive the other half.
California law distinguishes community property from separate property. Separate property is any property a spouse had before marriage or property that was received as a gift or an inheritance during the marriage. Such property will remain separate property unless there is evidence that the spouses intended it to become community property. Spouses may purchase property as joint tenants with separate assets, and if they are careful to make payments only with separate assets -- not community property assets such as a shared bank account -- the property will not be considered community property at the time of divorce, and the court may divide the property unequally depending on the contributions of the parties.
Steps After Divorce
If one spouse receives the marital home following a divorce, the couple should take additional steps to ensure that the deed properly reflects the ownership of the home. The court often requires one spouse to sign a quitclaim deed to relinquish ownership in the house, regardless of whether the house was owned as joint tenants or community property. The new sole owner should then refinance the home, so that the mortgage documents are in his name only.
- California Land Title Association: Title Consumer Series: Common Ways of Holding Title
- California Courts: Property and Debt
- Estate Planning in California: Divorce and Community Property
- California Family Code: Section 2580-2581
- Klueger & Stein, LLP: Planning in the Context of Marriage
- Court of Appeals of California, Fourth District, Division One: In re Marriage of Haines
- Digital Vision./Digital Vision/Getty Images