Transmutation agreements are mandatory and are usually respected during divorce proceedings. However, California may allow a spouse to object to the enforcement of an agreement in certain situations. A conversion agreement may be cancelled or cancelled if it appears that one spouse is acquiring a clear advantage at the expense of the other spouse. Recent case law has explained a case in which one party did not fully understand the impact of the transaction. In In re Marriage of Deluca (2019), the wife was informed by the husband and believed him that the husband had obtained land ownership by inheritance during his marriage and that land ownership was therefore separate property from the husband. In fact, the husband had bought the property during the marriage (so it is probably a common property, with some exceptions). The wife then signed, at the husband`s request, a quitclaim certificate confirming that the land was her only separate property. The court of justice decided that the property was the separate property of the husband. However, the Fourth District Court of Appeal found that the quitclaim deed was not a valid transmutation, as the spouse did not fully understand that the agreement would change the characterization of the property.
The wife believed that it was already the husband`s separate property because he told her it was. The Court of Appeal annulled it and found that the property is communal. Transmutation is a very common and important aspect of a divorce, because if a valid transmutation occurred during the marriage, it can affect those who are interested in the transferred real estate. In other words, who owns the property? A transmutation agreement can cause the property classification to shift in one of three directions. First, a spouse can convert separated property into collective ownership. Second, the spouses may convert collective ownership into separate ownership. Finally, a spouse may convert his or her own separated property into separate property from the other spouse. (For example, spouse A transfers his property X to spouse B.) It is up to the beneficiary party to demonstrate the absence of undue influence. The presumption of undue influence is repugnant if the spouse receiving the benefit can prove that the disadvantaged spouse “freely and voluntarily, with. full knowledge of all the facts and a complete understanding of the impact of the transaction. Lintz v.
Lintz (2014) 222 Cal.App.4th 1346, 1353. With respect to a transmutation agreement, the disadvantaged spouse must fully understand that he or she agrees to change the characterization of the property. A transmutation agreement is an agreement that changes the nature of the property of the spouses of the community at separation or vice versa. It can be used to change the character of the property to be acquired in the future as well as the property held by the spouses at the time of the agreement. The spouses are free to change the nature of the property in this way, provided that all the legal conditions are met. The main restriction for conversion agreements between spouses is that they must be fair and based on full disclosure of the relevant facts and (ii) they must not constitute a fraudulent transfer of assets. [Citation required] Transmutation can also be done by oral agreement….