What is community property?

Community Property Laws

What is Community Property?

What is community property under California family law? The question is a common one. The answer can range from the simple to the very complex. On this page, we will give you some community property principles that will help you understand the basics.

California Family Code 760 states, "except as otherwise provided by statute, all property, real or personal, wherever situated, acquired by a married person during the marriage while domiciled in this state is community property."

That may seem simple but the Family Code actually states a lot in that short sentence. But again, let us stay away from the nuances and exceptions and instead paint with a broader brush.

Real property is real estate of any kind. The most common examples are a home, land, commercial property, etc. Personal property is anything that is not real property.

The most common types of property spouses may acquire during the marriage are:

  1. The family residence,
  2. Household furniture, furnishings and appliances,
  3. Jewelry, art, coin collections and other valuables such as antiques,
  4. Motorized vehicles including cars, motorcycles, boats, etc.,
  5. Various kinds of bank accounts or accounts with financial institutions including savings, checking, credit union, brokerage accounts, etc.,
  6. Cash,
  7. Life insurance which may be term life insurance or life insurance with a cash surrender or loan value,
  8. Stocks, bonds, secure notes, mutual funds, etc.,
  9. Retirements and pensions,
  10. Profit-sharing, annuities, individual retirement accounts, deferred compensation plans, etc.,
  11. Accounts receivable or unsecured notes,
  12. Corporations, partnerships, limited liability companies or other forms of business,
  13. Intellectual property such as patents, copyrights, trademarks, etc.

Most of the items on this list above appear on a document called a schedule of assets and debts.

Community property can certainly be more than just what we wrote above but the above are the most common types of property at issue in a divorce. Keep in mind the above can also be separate property so a significant consideration when characterizing any property as community versus separate is when and how it was acquired.

Typically, property a spouse acquires during the marriage is considered community property unless there is an exception within California law. The most common exception is of course that of separate property which we discuss on a different page.

California even has a statute regarding a joint title community property presumption. That is part of Family Code 2581. That Family Code states:

“For the purpose of division of property on dissolution of marriage or legal separation of the parties, property acquired by the parties during marriage in joint form, including property held in tenancy in common, joint tenancy, or tenancy by the entirety, or as community property, is presumed to be community property. This presumption is a presumption affecting the burden of proof and may be rebutted by either of the following:

(a) A clear statement in the deed or other documentary evidence of title by which the property is acquired that the property is separate property and not community property.

(b) Proof that the parties have made a written agreement that the property is separate property. “

That is a pretty powerful statute because it creates a presumption that has to be rebutted to consider a property to be separate property.

People sometimes get caught up on how title is held. That is also a complex concept so I will tell you two things to keep in mind.

Do not assume that the way title is held guarantees whether property is community versus separate. In other words, just because, for example, a house is only under one spouse's name on the deed does not mean that house is 100% that spouse's separate property. But, at the same time, just because a spouse acquired a home during the marriage, regardless of whose name it may be under, does not guarantee the house is 100% community property.

These are the things that make community property law complex as you sometimes see a general rule, exceptions to the general rule and then, somewhat annoyingly, exceptions to the exception. That is why spouses should not represent themselves when there is property to divide.

Even the word "acquired" can lead to different interpretations. For example, if a wife owns property before the marriage but places that property during marriage under joint title with her husband, was the property acquired before marriage or was it acquired during the marriage? The answer is actually both but an argument can be made that because of the property transfer to joint form during the marriage, Family Code 2581 kicks in.

In such a situation however, that presumption can usually be rebutted because the wife bought the property prior to the marriage and that is when it gets interesting. From that point the question becomes how much of the property is community property and how much of it is separate property.

This hypothetical also causes other Family Code sections to kick in including Family Code 721. Because spouses are fiduciaries to each other, they are not permitted to take advantage of each other in any interspousal transaction. The term interspousal means transactions between the spouses. So when property arguably goes from separate to community property or vice versa or there are title transfers that are then argued as transferring a community or separate property interest, the question is whether one spouse took advantage of the other one. That thickens the analysis even more and if the property has a significant value and there was little to nothing given up in exchange for the interspousal transfer or transaction, it could lead to arguments of undue influence and an invalidation of the transfer.

Our firm has litigated these issues before. I can tell you every case will depend on its own facts. Absolutely nothing is black and white in these types of cases and there is no substitute for experienced family law representation.

I could write about the subject for many more pages. It is a fascinating set of rules and exceptions within the Family Codes and California law.

We encourage you to read our article on the separate property down payment on a home and what disputes often arise from it. It is great insight into Family Code 2640 on this issue.

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