Change of Ownership After a Divorce in California
In divorce or dissolution of marriage real property is awarded to one spouse. The spouse awarded real property must be the sole owner of record to sell, refinance or borrow on the property. To remove the former spouse, he or she conveys his or her ownership interest by deed to the other spouse.
A deed is a document signed by the owner of the real property to transfer ownership. Deeds are either “warranty deed” “grant deed” or “quit claim deed.” Grant deeds and warranty deeds by law have the owner’s promises he or she has not conveyed the property to someone else and the real property does not have any undisclosed taxes, loans, assessments or liens. Quit claim deeds convey ownership “as is,” including outstanding tax and debt.
The deed must be part of the public database maintained by each county in California. Deed are “recorded” in the county where the real property is located. Recording puts the world on notice of who owns the real estate and is the final word on ownership.
Each county assessor's office in California reviews all recorded deeds for that county to determine which properties require reappraisal of the property tax base. Proposition 13 allows the county assessor to reassess the property to its current fair market value as of the date of ownership change.
Since property taxes are based on the assessed value of a property at the time of acquisition, a current market value that is higher than the previously assessed Proposition 13 adjusted base year value will increase the property taxes. But there are exclusions.
To obtain the exclusion, the grantee fills out a form for the county assessor entitled Preliminary Change of Ownership Report (PCOR). Examples of husband and wife exclusions are: ownership change into or out of a trust, spouse added as owner, death of first spouse, and transfer pursuant to a divorce settlement or court order.
In divorce or dissolution of marriage real property is awarded to one spouse. The spouse awarded real property must be the sole owner of record to sell, refinance or borrow on the property.
Real Property Ownership During a Divorce in California
In California every proceeding for nullity, dissolution, or legal separation, four standard mutual temporary restraining orders are automatically effective. The orders bar both husband and wife from transferring or disposing of any real property. On death of one spouse real property owned as joint tenants or community property with right of survivorship automatically goes to the surviving spouse.
A spouse in a divorce will not want the other spouse to inherit. The solution is severe the joint tenancy. A severed joint tenancy does not change ownership and so does not violate the automatic restraining orders.[FN1] Severance changes ownership of both spouses from joint tenants to tenants-in-common.
Real property owned as a tenant-in-common is distributed on death according to the terms a Will. If there is no Will, the tenant-in-common interest is distributed according to the intestate laws of California. The intestate laws provide if there is no Will real property owned by one spouse is inherited by the surviving spouse. So at the same time the tenant-in-common interest is created a Will must be created.
The ambiguous status of property ownership is only while a divorce is pending. A judgment for dissolution of marriage automatically severs the joint tenancy. [FN2] So if a husband and wife do nothing with their joint tenancy property during the divorce, once the judgment is entered neither spouse will inherit the other spouse’s ownership interest.
From the date of filing a petition to the date judgment is entered for dissolution of marriage neither party can transfer ownership interest in real property. During this period if one spouse were to die the other spouse would inherit the real property. To avoid a windfall to the surviving spouse the joint tenancy is severed.
After the marriage is dissolved real property owned in joint tenancy is severed under California law.
[FN1] “We will hold that the severance of a joint tenancy by recording a declaration of severance is not a "transfer" or a "disposition" of "property." Accordingly, such a severance does not violate either the automatic temporary restraining order in a dissolution proceeding or a similarly worded court-ordered temporary restraining order or preliminary injunction.” Estate of Mitchell(1999) 76 Cal.App.4th 1378
[FN2] California Probate Code Section 5042
What we do