Transmuting property refers to the process of changing the character or ownership of a property from one type to another. This can involve transforming a piece of property from separate property to community property, or vice versa, as well as converting a tenancy in common to a joint tenancy, or changing the ownership of property from an individual to a business entity.
The concept of transmutation can be complex and is often subject to strict legal requirements.
In this article, we will take a closer look at the process of transmuting property and explore the various ways it can be done. From the legal requirements and procedures involved to the potential implications of transmuting property, we’ll cover everything you need to know to make an informed decision about your property. Whether you’re a property owner or a real estate professional, this article will provide you with a comprehensive overview of the process of transmuting property.
When to Transmute Property?
What does it mean to transmute property? California is a community property state. Therefore, when two people get married, generally all property, real and personal, they acquire during marriage belongs equally to each spouse. Similarly, any property that each spouse acquired before marriage remains their separate property. However, the characterization of the property can change from separate to community or community to separate through certain actions by the couple. This change in characterization is called a transmutation.
How to Effectively Transmute a property?
To effectively transmute the characterization of property, both spouses must adhere to the statutory formalities under the California Family Code. Specifically, for transmutations made on or after January 1, 1985 to be valid, they must be “in writing by an express declaration that is made, joined in, consented to, or accepted by the spouse whose property is adversely affect.” (Family Code § 852.) The writing must expressly state that the characterization or ownership of the property is being changed. This can be done through an interspousal transfer deed. For the transmutation to be effective as to third parties, the writing must be recorded.
Must be in Writing
Importantly, both spouses must accept the transmutation in writing. Therefore, one spouse cannot unilaterally transfer property to the other without the other spouse actively accepting such transfer. One spouse’s refusal to accept the other spouse’s interspousal transfer deed can actually prevent the transmutation of the characterization of that spouse’s property.
Spouses must strictly comply with the writing requirement under Family Code section 852 to transmute property. Therefore, unlike typical writing requirements for contracts with statute of fraud exceptions, the Family Code section 852 writing requirement is not subject to traditional statute of frauds exceptions. For example, spouses cannot effectively transmute property by showing that they entered into an oral agreement to transmute property and then performed the terms of the agreement. Similarly, extrinsic evidence is irrelevant and inadmissible to show an alleged transmutation. Instead, spouses must strictly comply with the express written declaration required under Family Code section 852 to validly transmute property.