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socrateaser
socrateaser, Lawyer
Category: Family Law
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California once again, This questions bridges real estate law/family

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California once again, This questions bridges real estate law/family law.House A and House B.House A was pre-marital inheretance about 14 years and I had a pre-marital interest and agreement.Added wife to title House A after she had sobbered up so to speak.Sold House A and purchased bigger house B, wife on that title as well.My pre-marital interest has been established, signed off my all parties and judge, that is $90K. Just sold Home B and have the $90K, good thinking on my part 13 years ago.On sale of home B the contract was a standard listing agreement we both signed with the Broker and Agent.Home sold and on distribution of funds $15K had to be held out in trust account because opposing counsel wanted me to pay for 64% of the commissions and cost to repair because of the $90K, indicting a greater equity share. On what legal basis can he demand this ?
Hello,

Family Code 2623 requires that debts incurred after separation but before entry of judgment of dissolution for "nonnecessaries" of life, must be confirmed "without offset" to the spouse who incurred the debt.

Given that you and your spouse each incurred the cost of sale (a nonnecessary, in my opinion, but reasonable minds may differ), each of you would have a one half share of the debt, regardless of your interest in the property.

However, Family Code 2625 requires that debts not incurred for the benefit of the community must be confirmed "without offset" to the spouse who incurred the debt.

So, the question is, did you incur a separate debt, for your separate interest in the property, and did you and your spouse each incur a joint debt for the community interest in the property -- or, was this a single debt incurred by each of you for the entire sale.

If the former analysis holds, then you would owe for the percentage of separate property, plus one half of the percentage of community property. If the later analysis holds, then the transaction would be a pure 50/50 split.

I have search California appellate case law and I am surprised to find no case on point to your concern. The closest case that I can find is IN RE MARRIAGE OF BELL (1996) 49 Cal. App. 4th 300, in which the California Court of Appeals determined that because the community property of spouses was increased by one spouse's embezzlement of funds from her employer, that the value of this ill-gotten gain must be divided 50/50 -- but that the bad-acting spouse would be separately liable for any debts incurred as the result of her wrongful conduct.

Applying this case to your circumstances, it appears within the court's discretion to apportion debts incurred according to the underlying property interests, but not to divide community property in a manner other than 50/50.

Considering the possible cost of litigating this matter to conclusion in an appellate court, you must make the choice of whether or not to fight. Family Court, at its base is still considered a court of "equity" (fairness), despite the reality that the state legislature has effectively removed practically all discretion from family court judges (a fact that the same judges tend to ignore daily) -- so, I think it's highly likely that the first analysis, where the cost of sale is apportioned based upon the parties' respective interests in the property, would be the court's ruling -- because there simply isn't anything in statute or case law to prevent such a ruling.

A very interesting question, to be sure. Thanks for offering it here.

Hope this helps.
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Customer: replied 3 years ago.

Would this have any bearing ... this was signed in December 2012 by the Judge, Both counsels and both litigants ...on this matter.


 


Residence put on Market by May 2013. Repair by prior written agreement. Then divide costs.


 


Husband gets first $90,000 NET proceeds. Parties equally divide rest on net sales proceeds.


 


>>>>>>>>>>>>>>>>>>


 


Net sales proceeds would be after commissions ?


 


Apperars opposing counsel is adding in after the fact ?


 


 


 

The text of the order appears to favor an interpretation whereby the division is simply net of any closing costs (escrow, title, sales commissions, etc.). And, since it was stipulated to by the parties, it is subject to enforcement as agreed, unless the order violates public policy.

Opposing counsel will have trouble getting the order set aside by the judge. It's certainly possible to set aside, but if I were the judge I would hold that your spouse was represented by legal counsel, and she agreed to the order as written, therefore, it's enforceable as ordered. And, what is ordered is that net proceeds are divided 50/50 after costs of sale (without apportionment). If your spouse has a problem with the result, then she can sue her attorney for malpractice.

I think you win, based upon what you present. You would argue in court what I've just described.

Hope this helps.
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