In regards to the division of property and assets, an important family law appellate court decision came down last year regarding a husband’s failure to rebut the presumption of undue influence that arose when he refinanced a house in his name alone and refused to convey title to himself and his wife in joint names after she quitclaimed her interest to facilitate a loan.
IRMO Fossum (2011) 192 CA 4th 336, 121 CR3d 195 involved a married couple that purchased a house in 1994, whereby they agreed that Husband would obtain a purchase money loan and take title to the house in his own name, and Wife would execute a quitclaim deed, due to the fact Husband’s credit was better than Wife’s. Husband had promised to reconvey title to Wife after the close of escrow. During the marriage, the couple had refinanced the home twice, making a similar agreement each time. However, after the second refinance, Husband refused to put wife back on the title to the house.
During the parties’ ensuing divorce, Husband also claimed he was entitled to reimbursement for his separate property contribution to the downpayment on the house. However, the trial court had heard “conflicting testimony as to whether the source of the funds drawn on the parties’ joint bank account came from their joint earnings working in Husband’s construction business in 1994, or was solely the fruit of Husband’s efforts and savings.” The trial court held that the house was community property, and Husband appealed.
The California Court of Appeals affirmed the judgment with respect to the ruling on the house. The appellate court determined that the trial court had found Wife’s testimony credible regarding the parties’ arrangements for taking title and that the downpayment came from money they had earned together. Under California Family Code § 721, a presumption arose that Husband exerted undue influence in having his wife sign a third quitclaim deed on the basis of his promise that he would restore her name to the title, and Wife did not have to otherwise prove fraud or deceit.
