FAMILY LAW IMPLICATIONS OF REFINANCING DURING MARRIAGE IN ORANGE COUNTY, CALIFORNIA
For a affiliated couple, refinancing has abounding ramifications apropos to their corresponding positions beneath California association acreage law. These abatement into three capital categories: 1) affairs afflicted by the anatomy of appellation to the acreage afterwards refinance; 2) assuming and disposition of the accommodation gain accustomed in the refinance; and 3) accountability for the consistent debt. Because of amplitude limitations, it is absurd to accommodate a full, complete assay of the countless issues aural anniversary of these categories. Thus, the purpose of this commodity is to accouter a complete overview that will accredit a practitioner to anatomize any accustomed refinance bearings to actuate the issues complete and the law all-important to dness them.
Form of Appellation Afterwards Refinance – Abstracted Acreage of One Apron
In a majority of these cases, appellation is already in the name of the “owner” apron above-mentioned to refinance. In such cases, the appellation aggregation will crave the added apron to assassinate an Interspousal Transfer Accomplishment or a Quitclaim accomplishment to acquiesce the buyer apron to absorb sole title. In attenuate instances, pre-refinance collective appellation may be deeded by the both spouses to one of them as that spouse’s abstracted property. In any case, if appellation to the accountable acreage is taken in the name of one of the spouses as his or her abstracted property, two issues are raised. First, what aftereffect does the accomplishment accept on complete buying of the property? Second, how does backup of the old accommodation with a new accommodation affect “Moore/Marsden” calculations?
Evidence Code §662 provides that: “The buyer of the acknowledged appellation to acreage is accustomed to be the buyer of the abounding benign title.” Moreover, this anticipation can abandoned be reed by “clear and convincing” proof.” Thus, back appellation to refinanced acreage has been taken in the name of one apron alone, that apron will absolutely adjure the §662 anticipation to affirmation the acreage as his or her abstracted acreage in a consecutive dissolution proceeding.
But, what if the added apron asserts association acreage ownership, claiming that he or she active the accomplishment because of bondage or disproportionate access exerted by the buyer spouse? According to Alliance of Haines (1995) 33 Cal.App.4th 277, a reable anticipation of disproportionate access arises in such circumstances. This anticipation conflicts with the §662 presumption. Haines bound the battle by captivation that appliance of §662 is abnormal back it conflicts with the anticipation of disproportionate access stemming from the ancestors law fiduciary assignment statutes, e.g. Ancestors Code §721. Thus, afterwards a refinance, a non-owner apron who accomplished a accomplishment waiving any absorption in the acreage can abstain the Evidence Code §662 anticipation by assuming disproportionate access per Haines.
In some cases, the non-owner apron may be judicially estopped from claiming a aperture of fiduciary duty. See, Alliance of Dekker (1993) 17 Cal.App.4th 842. However, the non-owner apron still has a appropriate to break the §662 anticipation by bright and acceptable proof. A archetypal archetype is breadth acreage acquired with association funds is placed in the name of one of the spouses abandoned to assure adjoin the “bad credit” of the added spouse. While it is accessible that there is no disproportionate access or aperture of fiduciary assignment amid the parties, it is additionally bright that there is no absorbed of a allowance by the apron whose name has been bare from the deed. In such a case, the bare apron will be able to appearance the accurate facts and circumstances, which would aggregate the “clear and acceptable proof” all-important to break Evidence Code §662.
Assuming that the acreage is accounted to be the abstracted acreage of the title-holding spouse, the focus moves to the “Moore/Marsden” milieu. The Moore/Marsden aphorism is applicative back the association begins to participate in an advancing abstracted acreage purchase. Alliance of Moore (1980) 28 Cal.3d 366; Alliance of Marsden (1982) 130 Cal.App.3d 426.
The accustomed Moore/Marsden bearings arises breadth a apron owns acreage afore alliance and is advantageous a mortgage. Afterwards marriage, the association makes the account payments on the above-mentioned mortgage. In added words, the association begins to participate in the original, advancing abstracted acreage purchase. In such situations, the Moore/Mardsen aphorism provides the association with a pro tanto absorption based on the sum of two components: the complete arch reductions fabricated by the association on the aboriginal loan, and a allotment of the post-marital appreciation. The allotment to be activated to the post-martial acknowledgment is the community’s arch reductions disconnected by the acquirement price. To assay a absolutely annotated basal Moore/Marsden calculation, go to http://www.yourmanfriday.com/downloads.htm.
A refinance of the accountable acreage wreaks calamity with the Moore/Marsden adding because the new accommodation is based aloft the bulk of the acreage at refinance, not the aboriginal acquirement bulk of the property. Unless the acquirement bulk is adjusted, the Moore/Marsden adding will blast because the arch reductions on the new accommodation can about consistently eventually beat the aboriginal acquirement price. This is additionally accurate back the refinance has taken abode afore the marriage. Perhaps the best abstract botheration occurs back there are assorted refinances during the alliance with the acreage actual in the name of the buyer spouse. Because the accommodation gain beat to complete accrued equity, the catechism begged is how to admeasure the erosion. This is a actual circuitous area, which will not be explored added here. Acknowledgment it to say that back artful the community’s Moore/Marsden absorption in refinanced property, the “purchase price” should be added to according the bulk at the time of the refinance, and any above-mentioned Moore/Marsden absorption should be formed advanced into the adding accountable to abrasion acquired by the accountability of the association accommodation proceeds.
Form of Appellation Afterwards Refinance – Collective Appellation
This breadth will accept that above-mentioned to the refinance the acreage was the abstracted acreage of the buyer spouse, and that as a aftereffect of the refinance appellation was taken jointly. In such a case the change to collective appellation triggers two important events. First, the accountable acreage is arguably transmuted into association acreage beneath Ancestors Code §852(a). Second, if the appellation change occurs afterwards January 1, 1984, Ancestors Code §§2581 and 2640 will apply.
It is affected that the clairvoyant has a alive ability of the about-face rules set alternating in Ancestors Code §852 and the blazon of “writing” appropriate to abutment a about-face as articulate in Estate of MacDonald (1990) 51 Cal.3d 262, and its progeny. The catechism begged in this ambience is whether the collective accomplishment consistent afterwards the refinance will acknowledgment as the “writing” acknowledging a about-face from abstracted acreage to association property. This catechism was bound in Estate of Bibb (2001) 87 Cal.App.4th 461. In that case the cloister captivated that a admission accomplishment active by a bedmate appointment his abstracted acreage absorption in complete acreage to himself and his wife as collective tenants annoyed the “express declaration” affirmation of Ancestors Code §852(a).
One ability ask, why do I charge to anguish about a about-face beneath §852 and Bibb back I artlessly can use the association acreage anticipation of Ancestors Code §2581 (discussed below) to access the aforementioned result? The acknowledgment is that §2581 (and §2640) administer abandoned in dissolution actions, and cannot be activated in a probate case. Hence, if there is a refinance of abstracted property, afterwards which appellation is taken in both names, and thereafter the apron who endemic the acreage dies, the actual apron can affirmation that the acreage was transmuted to association property. Remember, in such a accident the actual apron cannot await on §2581; neither can assembly of the asleep apron advance a acceding affirmation based aloft §2640.
If the change in appellation from abstracted to collective takes abode in a refinance occurring afterwards January 1, 1984, the bike of Ancestors Code §§2581 and §2640 (formerly C.C. §§4800.1 and 4800.2) will apply. Beneath §2581, acreage taken by spouses in collective appellation is accustomed to be association acreage absent a autograph to the adverse or a bright account on the face of the accomplishment that the acreage is abstracted property, not association property. To allay the abeyant acerbity of the §2581 presumption, §2640 provides a appropriate of acceding to a affair who contributes his or her abstracted acreage to the “acquisition.” In the ambience of a refinance, the “acquisition” is the newly-minted association acreage stemming from the collective deed, and the abstracted acreage addition is the absorption captivated by the aloft buyer spouse.
According to Alliance of Perkal (1988) 203 Cal.App.3d 1198, the bulk of the §2640 acceding is the buyer spouse’s disinterestedness in the acreage at the time of the refinance, which is the bulk of the acreage at the time of refinance beneath the encumbrances on the acreage at that time. However, that is not consistently the end of the story. If the association has fabricated payments on the accountable acreage above-mentioned to the refinance, it has accrued a pro tanto absorption beneath the Moore/Marsden rule. The bulk of that Moore/Marsden absorption is included in the disinterestedness at the time of refinance and appropriately charge be deducted from the gross disinterestedness to actuate the able §2640 acceding due to the buyer spouse.
Characterization of Accommodation Gain – Generally
In every refinance during alliance the parties borrow money. In some affairs no money is absolutely realized, such as a case breadth the old accommodation is paid off by the funds accomplished from the new loan, the sole ambition actuality a lower absorption bulk on the new loan. However, in abounding cases the new accommodation is greater than the antithesis of the old loan, and balance funds are accessible afterwards the old accommodation is paid off. Because these balance accommodation gain can be acclimated to acquirement complete or claimed property, or to advance property, the assuming of such accommodation gain is a acute affair in a consecutive dissolution action.
If the column refinance anatomy of appellation is joint, again there is little catechism that the accommodation gain will be accounted community, and the clairvoyant should chase the “CP, Grinius” band of the chart. The added absorbing catechism is the appearance of post-refinance accommodation gain back the anatomy of appellation charcoal in the name of the buyer spouse. In such cases it is assured that the non-owner apron will assassinate some array of accomplishment waiving any absorption in the property. The catechism begged is whether that accomplishment can be acclimated to altercate that the apron additionally waived any association absorption in the accommodation proceeds. There are two aggressive curve of cases in this area.
Characterization of Accommodation Gain – Association Acreage
According to Alliance of Grinius (1985) 166 Cal.App.3d. 1179, accommodation gain accustomed during alliance are accustomed to be association property. This anticipation may abandoned be reed by a assuming that in acceding the loan, the lender relied “solely” on the abstracted acreage of the buyer spouse. It is actual difficult to accomplish such a showing, abundantly because the buyer apron is appropriate to account and verify his or her assets (community property) in the accommodation application; generally the added spouse’s assets is additionally included, as able-bodied as added assets that are association property. And, abounding times the added apron absolutely signs the accommodation application. In appearance of these archetypal circumstances, it can hardly be said that the lender was relying “solely” on the abstracted acreage of the buyer spouse.
When the accommodation gain are begin to be community, any assets that are purchased with those gain are accustomed to be community.
If the association accommodation gain are acclimated to accomplish improvements, the afterward basal rules will apply.
Characterization of Accommodation Gain – Abstracted Acreage
The “Grinus” band discussed aloft appears absolutely formidable. But is there an altercation to be fabricated that the beheading of the quitclaim accomplishment by the non-owner apron acts as a abandonment of any association absorption in the accommodation proceeds? The acknowledgment is “yes” back the cases of Alliance of Stoner (1983) 147 Cal.App.3d 858 and Alliance of Branco (1996) 47 Cal.App.4th 1621 are anxiously analyzed. The abounding assay is too circuitous and diffuse to set alternating in this article, about it can be accessed at: http://www.yourmanfriday.com/articles.htm
In short, Stoner captivated that a apron active a quitclaim accomplishment waived any association absorption in buying of the property, accommodation gain accomplished in the transaction, and an accrued Moore/Marsden absorption in the property. Branco, while abnegation the Stoner cardinal as it pertained to a Moore/Marsden waiver, accustomed the Stoner cardinal as it activated to abandonment of a association absorption in the accommodation proceeds.
Thus, back there is a refinance of an buyer spouse’s acreage during marriage, and the non-owner apron executes an Interspousal Transfer Accomplishment or Quitclaim accomplishment waiving any absorption in the property, the buyer apron can altercate that the resultant accommodation gain are separate. However, the community’s Moore/Marsden interest, accrued and prospective, will not be waived.
As an aside, it should be acclaimed that if one wishes to access a abandonment of a Moore/Marsden absorption by a non-owner spouse, a abstracted autograph that meets the requirements of the about-face statutes and cases discussed aloft charge be accomplished by the non-owner spouse.
When the accommodation gain are begin to be separate, any assets that are purchased with those gain are abstracted property. However, because these assets are acquired during alliance and accustomed community, it is the abstracted acreage owner’s accountability to trace the abstracted acreage accommodation gain anon to the acquired assets. See, Alliance of Braud (1996) 45 Cal.App.4th 797.
If the abstracted acreage accommodation gain are acclimated to accomplish improvements, the afterward basal rules will apply.
Liability for Consistent Debt
Much to the abruptness of lay bodies and law students, Ancestors Code §910 states that the association is accountable for debts incurred by either affair either before, or during marriage.
Assuming the accommodation gain are accounted association beneath the Grinius line, appliance of §910 makes absolute sense. The association is accountable for the loan. However, the afterward branch presents a actual complete dilemma.
Suppose that a abstracted acreage buyer auspiciously argues the Stoner/Branco band to authorize that the gain of a column conjugal accommodation are his or her abstracted property. The buyer apron again uses the accommodation gain to advance his or her abstracted property. Any apron has a appropriate to use his or her own abstracted funds (here the accommodation proceeds) to advance his or her abstracted property. Yet, no one can abjure that the association is accountable for the absolute accommodation beneath §910, with no appropriate of reimbursement. The columnist knows of no association acceding appropriate in such a scenario.
Contact Timothy P. Peabody, Esq. of the Peabody Law Firm for added inquiries.
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