Transmutation must be accepted by the benefited spouse. . .
In affirmance, Fourth District holds that trial court did not err in determining that interspousal transfer deed transferring husband's community interest in wife's house to her, presented to her in 2006, but rejected by her and not recorded until 2012, was not a valid transmutation.
In re Marriage of Wozniak
(December 29, 2020)
California Court of Appeal 4 Civil D074813 (Div 1) 59 Cal.App.5th 120, 273 Cal.Rptr.3d 421, 2021 FA 1967, per Aaron, J (O'Rourke, Acting PJ and Dato, J, concurring). San Diego County: Barton, J, affirmed. For appellant: A. Stephen Rocha, CFLS (619) 542-1100. For respondent: Richard Prantil, (619) 306-7233. CFLP §J.48.0.1, J.48.5.
Before Anna and Grzegorz Wozniak were married, Anna owned property in La Mesa. Sometime during the marriage, she converted the title to the property to joint tenancy with Grzegorz and refinanced it. In 2006, Grzegorz executed an interspousal transfer deed, transferring his community interest in the property to Anna. He presented the deed to Anna, but she rejected it. After that, the deed sat in a drawer in the house. However, following a 2012 incident in which Anna was arrested for domestic violence and Grzegorz obtained a protective order against her, Anna recorded the deed.
After the couple began disso proceedings, they argued over the division of their property. During two days of trial in June 2018, Anna testified that she put Grzegorz's name on the title to the La Mesa property only for purposes of the refinance. Grzegorz testified that he had executed the interspousal transfer deed in the hope that the arguments and conflict between them would end if the property was Anna's separate property once more. However, he stated, his action surprised Anna and made her suspicious; she "'outright and immediately rejected the deed,'" saying that she wanted everything to be community property. With that in mind, Grzegorz said, he added Anna's name to the title to one of his parcels of separate property. He told the court that he believed that Anna had not recorded the 2006 deed until after the 2012 domestic violence incident.
In its decision after trial, the trial court found, among other things, that no transmutation had occurred when Grzegorz presented Anna with the 2006 deed because she rejected it and Grzegorz no longer had any intent to make a transmutation when Anna recorded the deed in 2012. The trial court awarded the La Mesa property to Anna as her separate property and ordered an equalizing payment reflecting the community interest in the property. That court entered judgment on July 10, 2018.
Anna appealed, but the Fourth District affirmed.
Ways and means. . .
Anna argued that the trial court erred by finding that there was no valid transmutation because she had initially rejected the transfer deed. As she saw it, Grzegorz's execution of the deed was sufficient to transmute his community interest in the property to her; she didn't need to accept the deed to make the transmutation valid. The justices were not so sure. They recognized that Fam C §850 requires that a transmutation must be an express written declaration that is made, joined in, consented to, or accepted by the spouse whose interest in the property is adversely affected. The declaration must satisfy the statute of frauds and must express a clear and unambiguous intent to transfer a property interest, along with language indicating that characterization or ownership of the property is being changed. The panel further noted that a valid transmutation is subject to the provisions of Fam C §721, which requires spouses to act toward each other according to the rules governing fiduciary relationships.
She had to say yes. . .
The justices then took a closer look at Fam C §850 to see if that statute required acceptance of a transmutation in order to be valid. Neither party contended that the alleged transmutation failed to meet the requirements for being a proper written instrument. However, that alone did not mean that it constituted a valid transmutation. The panel reasoned that the statute permits spouses to transmute property either by agreement or by transfer. If by agreement, they found, the party who is receiving the property under the agreement must accept the title being conveyed; absent acceptance, no title is conveyed. The justices thought that allowing a valid transmutation to take place without the acceptance of the receiving spouse made no sense; it would deny the recipient the right to refuse to accept and would permit the transferring spouse to unload on the other a highly incumbered piece of property. The panel could not believe that the legislature intended to permit such an outcome. A valid transmutation, they concluded, must be accepted by the spouse to whom the transfer is made.
Enough is enough. . .
The panel found no merit in Anna's contention that there was insufficient evidence that she hadn't accepted the transfer deed; there was plenty, they found. As for her assertion that her 2012 recordation of the deed had the effect of making the transmutation valid, the panel didn't buy that either. Given that she had initially rejected the deed, the justices found, Grzegorz would have had to redeliver it to Anna and she would have had to accept it before her recordation would be valid. Absent redelivery, the panel said, there was no evidence that Grzegorz still intended to go through with the transmutation. Summing up, the justices held that the trial court correctly determined that there was no valid transmutation on these facts.
Previous cases dealing with transmutation have focused on whether the elements of the various statutory requirements, such as a written instrument or a clearly expressed intent to transmute, have been satisfied. This case is important because it deals with an issue (acceptance of the transmutation) that courts have not considered before. Keep it in your files for future reference. The issue is unlikely to come up often, but when it does, you will be ready.
11 Witkin, Summary of Cal. Law (11th ed. 2020) Com Prop, § 157
Hogoboom & King, Cal. Practice Guide: Family Law (The Rutter Group) ¶¶ 8:472, 9:8.1, 9:87