FAQ's - What If Our Residence Is In My Wife's Name?Q. When my wife and I got married 8 years ago, we took title to our residence in my wife's name because of my poor credit, but we agreed verbally the house was ours together. Now I am thinking about divorce. Do I have an interest in the house?
A. Yes, but not what you would have had if title was taken jointly. The key question is whether you consented to her taking title in her name alone. If you knew that this was occurring, and a reason included your inability to qualify because of poor credit, then you probably consented. This means that the home is and always was your wife's separate property, despite the fact that it was acquired during marriage (all other things being equal, property acquired between the date of marriage and date of separation is presumed to be community property).
There are a couple of reasons for this. One is that Evidence Code section 662 contains what is known as a "title presumption". The party seeking to challenge the manner of how real estate (and other property) is titled has the burden of proof by clear and convincing evidence that the parties intended something other than what the record title says. "Clear and convincing" is a steep standard to meet, and the party who has that burden to overcome often loses. In terms of percentages, this is likened to 85% certainty on the part of the trier of fact (the family court judge) and is considered to require proof on a subject "sufficiently strong to command the unhesitating assent of every reasonable mind". Verbal agreements (pillow talk) are ignored, as is evidence concerning them; where the proof depends on pillow talk. One reason for this harsh rule is that the divorce courts want to get out of the liar's contest business and instead to make decisions based upon "bright line" rules - since there is an incentive for divorcing spouses otherwise to commit fraud when the proof consists of whether discussions occurred and what they consisted of.
So, more than one recent appellate case has ruled the EC section 662 title presumption defeats the Family Code section 760 presumption (that property acquired during marriage is community), so that property acquired in the name of one spouse alone with the knowledge and consent of the other spouse is the acquiring spouse's separate property. See Irmo Brooks & Robinson (2008) 169 Cal.App.4th 176.
At the same time, in most contexts there is a presumption of undue influence that arises from any transaction during the marriage that benefits one spouse alone. This results from the nature of fiduciary duties existing between spouses, as described by Family Code section 721(b) in particular. Where that that presumption is found to arise, then this shifts the burden of proof to the advantaged spouse to show by a "preponderance of the evidence" [51% or better] that there was no undue influence before they can claim 100% of the benefit (i.e., before your wife could claim the house was hers, she would need to show that it was more likely than not that you knew all the facts, consented, and possibly received something in return). However, a presumption of undue influence apparently only arises in interspousal transactions, that is transfers between the parties themselves. In your situation, the property was acquired from a third party.
Still, the law is murky on this point and you would definitely be arguing breach of fiduciary duty in this setting. And, as in your case, it creates unfair results: Based upon this example, the husband and wife did not intend when the property was acquired that it be wife's separate property upon divorce, but that may now be the net effect. The Brooks and Robinson case has been criticized, and is seemingly inconsistent with earlier authority about what happens when the title presumption (EC 662) and fiduciary duties (FC 721) conflict. The case may become limited by future rulings.
Q. The house was worth alot more, but it is still worth at least $120,000 more than we paid for it today. Don't I get any of this?
A. Assuming that a trial court awards the house to your wife as her separate property, the community estate - meaning both of you - has a right of reimbursement, or equitable apportionment, for a portion of the mortgage pay down (principal reduction only) during this reasonably lengthy marriage and also a percentage interest in the appreciation during the marital period. This needs to be calculated in what is typically called a Moore-Marsden calculation. The Moore-Marsden formula requires that we know certain facts in order to figure the correct reimbursement ratios to the community estate (of which you get half), and none of that information is presented here. That requires another FAQ for another day!