What is Community Property? And how is it different from other kinds of ownership?
Simon & Garfunkel’s song “America” begins with “Let us be lovers we’ll marry our fortunes together, I’ve got some real estate here in my bag.”
But does California law really make husbands and wives “marry their fortunes together?” Most married couples will buy a house as “husband and wife” or as “joint tenants” during their marriage. But what does that mean if a husband buys a car from his payroll check only in his name during the marriage, or a wife opens a business during the marriage with money she earned after marriage and puts the business profits into a checking account in her name only? What happens if one spouse buys a lot during the marriage in his or her name only? Does it matter how title is held to property acquired during marriage?
These are questions as old as California. Marital property law in California always viewed property acquired by either spouse as “a community of property between husband and wife, [borrowed] from the Spanish law.” There “is hardly any analogy between … the doctrines of the common law in respect to the rights of property consequent upon marriage.” California’s law of marital property “proceeds upon the theory that the marriage, in respect to property acquired during its existence, is a community of which each spouse is a member, equally contributing by his or her industry to its prosperity, and possessing an equal right to succeed to the property after dissolution, in case of surviving the other. To the community all acquisitions by either, whether made jointly or separately, belong. No form of transfer or mere intent of parties can overcome this positive rule of law. All property is common property, except that owned previous to marriage or subsequently acquired in a particular way.” Meyer v. Kinzer (1859) 12 Cal. 247, 250-252. Though at odds with the English common law (where married women had little or no right to own, manage or inherit property), this seemingly simple “partnership” concept has been, and continues to be, the subject of litigation (see for instance my posting on the majority and concurring opinions issued by the California Supreme Court Case on In re the Marriage of Frankie Valli and Randy Valli decided May 15, 2014).
To understand the concepts, it helps to translate some of the phases into modern terms. For instance “equally contributing by his or her industry to [the marriage’s] prosperity” easily means that someone working for a pay check, or working in a business they open is using his or her time, skill, and labor to generate income for the marriage. Less obvious, but just as true, a spouse who maintains the house, raises the children, arranges medical appointments and supporting the other spouse in their efforts to work or build a business is contributing their “industry” to make it possible for the working spouse to maximize their earnings. So every dollar earned through work of either spouse belongs equally to both.
What does this mean in the context of the questions posed at the beginning of this post?
Let’s take the husband who bought a car in just his name with his paycheck [I know, nice pay check] during the marriage. It does not matter what the title says, the car is community property belonging to both spouses.
Wife owns a 50% interest in the car. How about the wife who opened a business during marriage which she alone manages, and deposits the profits from the business into an account in her name only? Again, the business, the profits, and the bank account are community property belonging to both spouses. Husband owns half regardless of the name on the account or the business.
And if one spouse buys a parcel of land during the marriage in his or her name only. As Meyer v. Kinzer held “No form of transfer [title on the deed] or mere intent of parties can overcome this positive rule of law,” so if the money used to buy the lot was community property it does not matter what the title says about one spouse owning, or even the intention that the spouse had when he or she bought the lot. It would be community property, in which the other spouse owned 50%.
Are there exceptions? Of course. For more information, see the blog post on preserving separate property during marriage. And see the blog post on In re the Marriage of Frankie Valli and Randy Valli about “transmutation” of property to or from a community or separate status.