Law Offices of Hannah E. Sims, LL.M.
Oakland Certified Family Law Specialist

How quasi-community property ownership affects divorces

As you may have learned if you filed for divorce, the community property laws of California (and a handful of other states) can seriously impact the final settlement you receive to start your new life unencumbered.

Those California residents who have valuable property and significant debts should learn all that they can about the community property laws of the state, which also affect the division of debts as well as property. It's also important that those who signed pre- and postnuptial agreements seek guidance before filing their petitions for divorce. This can help avoid common pitfalls that could deprive you of your rightful share of the property from your marriage.

What constitutes property?

Under the law, property constitutes anything of value that can be acquired, purchased or sold, including:

  • Vehicles
  • Houses
  • Furniture
  • Clothing
  • Cash
  • Pension plans
  • 401(k) plans
  • Bank accounts
  • Security deposits on apartments
  • Stocks
  • Life insurance with cash value
  • Businesses
  • Patents

How is property divided in divorce?

When filing for divorce or legal separation, the spouses can divvy up the community property as they see fit and file their agreements with the courts. Of course, not all couples are able to put aside the differences that led them to divorce and make decisions about property division.

That's when the court steps in to render a final decision about the division of debts and assets from a marriage. Until the agreement is signed and filed with the courts, both parties in the marriage retain the rights and liabilities of their communal assets and debts.

It's also important to understand that regarding debts owed, if your ex reneges on paying his or her share, the lender or company extending credit may still legally pursue both of you for the outstanding balance unless you arranged to have your name removed from the account or debt.

Sometimes spouses only learn of huge debts with which their partners have encumbered them when they file a petition to separate or divorce. If for no other reason, check your credit annually for free with the three major credit bureaus to avoid this most unpleasant of surprises.

Separate versus community and quasi-community property

Community property includes everything that the two of you jointly own, including all that was purchased or acquired during the domestic partnership or marriage (including debts).

The exceptions to community property are gifts and inheritances made to only one spouse, but even then, there are exceptions known as quasi-community property. This includes property acquired by either or both partners or spouses while they lived in other states that would have been considered community property if it was acquired in California.

This applies to spouses who lived elsewhere during the marriage and who purchased real estate or other property and/or earned money while living in the other state(s). During legal separations and divorces in California, quasi-community property is considered to be community property.

Here's how it can play out in your California divorce:

You and your spouse spent a few years of your marriage living and working in New York City. During those years, you bought a brownstone in Brooklyn which you are now renting to others. While New York is not a community property state, any earnings from your respective New York salaries and the income from the rental of the brownstone are legally considered to be quasi-community property.

This is because had the two of you bought the property and earned the salaries while living here in California, the proceeds would be considered community property. In your California divorce, that's how they will be treated.

Technicalities like this are one reason why it's vital not to go into a divorce uninformed of all of the legal consequences of your decision.

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