Does a Quitclaim Deed Negate Community Property Ownership?

Community property law idealizes the concept of marriage – both spouses equally own everything acquired while they're together. Nine states follow this code: Arizona, Louisiana, Washington, Nevada, Wisconsin, California, Arizona, New Mexico and Idaho. Generally, only one document can override this – a prenuptial agreement. Spouses sometimes try to supersede community property law with deeds for convenience's sake. For example, they might want to hold title to property in one name for credit reasons so they can more easily qualify for a loan. They often meet with limited success, however – at least in the event of divorce.

Community property is anything acquired from the date of your marriage until the date of your separation. If one spouse dies, this also ends community property ownership. This simple concept can become a little complicated, however, under certain circumstances. For example, some states recognize special community property deeds which effectively double-up on community property rules but also allow property to pass to the surviving spouse at death without the necessity of probate. If you have this sort of community property deed, neither spouse can quitclaim her interest in the property to a third party without the consent of the other, so a quitclaim deed can't negate the ownership terms. It's also possible to change separate property acquired before the marriage into community property by taking certain actions.This might be the case if you create a quitclaim deed that vests ownership in both spouses rather than just the one who owned the property before the marriage.

Any deed you enter into effectively erases the ownership terms of the last one. For example, two spouses might hold joint title to real estate, either through a community property deed or a joint tenancy deed. If they want to change that, they can create a new deed – a quitclaim deed in which one spouse "quits" her interest in the property and gives sole ownership to the other. One problem with quitclaim deeds is that they don't guarantee that the person quitting her interest actually has an interest to give up. For this reason, they're most commonly used between spouses or other family members, not for the sale of real estate to an unrelated third party. A quitclaim deed can change ownership to satisfy a lender if you want to refinance your marital home in just one name, but if you end up divorcing, the deed probably will not impress the court. Judges in community property states will most likely still consider the property to be marital, owned equally by both of you, regardless of the deed.

Community property states usually don't have specific statutes that deal with changing marital property to a spouse's separate property with a deed. Courts must therefore decide these issues based on a judge's personal interpretation of the law. This results in case law – decisions handed down by judges over the years that create a legal trend. At least two California courts have ruled in landmark decisions that a quitclaim deed does not negate community property ownership. If real estate is acquired during the marriage, this fact overrides the provisions of any deed that transfers title into one spouse's name alone. (References 1 and 4) The pivotal factor is usually whether the real estate originated as community property, however. The Arizona Court of Appeals has ruled that property that starts out as one spouse's separate property by deed, even during the marriage, can't be pulled into the marital estate in the event of divorce.

A secondary concept behind community property law is that of the fiduciary relationship between spouses. The law presumes that spouses have an obligation to treat each other fairly. If a quitclaim deed effectively fleeces one spouse out of any share of ownership in what would otherwise be a community asset, courts can assume that the transaction occurred through undue influence, fraud or duress – otherwise, the spouse who gave up ownership probably would not have done so. Therefore, regardless of what a quitclaim deed says, an asset is typically treated as community property in a divorce if it started out that way.