Spousal Property Transfers and Quit Claim Deeds Explained

An interesting situation arises when, during a marriage, the spouses take title to their real property and, for whatever reason, transfer it into the name of the other spouse during the marriage. Does this mean that the transferring spouse gave up their right to the house? Does the receiving spouse now have full title to the property?

This is a question often encountered these days, especially in light of the many families taking advantage of the refinance boom. Often, during a refinance of a marital home, one spouse may not have the same glowing credit rating as the other spouse. Thus, to obtain a better interest rate on the refinance, the lower-rated spouse will Often Quitclaim or otherwise transfer title to the better-rated spouse, with a promise that title will be changed back after the refinance is completed. Then, of course, as you can well imagine, the title never gets transferred back to the disadvantaged spouse. Then, at the time of divorce, the advantaged spouse (who remains on title) pulls out the transfer deed and informs the disadvantaged spouse (who is no longer on title) that they do not have any right to the house; all their rights were transferred to them when the refinance took place. Is this true? What happens?

This situation arose in the case of Marriage of Barenson. This case stands for the position that while spouses are free to transfer property to their spouse, whether they intended to actually release all their interest in the property they owned is another matter. The courts will presume that such a transfer, even if it meets certain requirements, was the result of undue influence by the advantaged spouse used against the disadvantaged spouse, which will generally result in invalidating the transfer to the advantaged spouse.

Why the presumption? The public policy of the state of California is to protect and promote the vital institution of marriage. Thus, when spouses deal with each other, the courts will uphold the fiduciary duty owed to the other spouse (this duty is created upon marriage and requires spouses to deal fairly and in good faith), thereby protecting a disadvantaged spouse.

What Is a Quit-Claim Deed in Marriage?

A Quit Claim Deed is one of the simplest ways to transfer property. It allows the transferring spouse (grantor) to relinquish whatever ownership interest they have to the other spouse (grantee). Importantly, it provides no guarantee of a clear title; it only conveys the rights the grantor has at the time of the grant.

In the context of marriage, quit-claim deeds are often used in refinancing situations where only one spouse qualifies for a favorable interest rate. While the intent may be temporary, the legal consequences can last far beyond the refinancing process. Courts will carefully scrutinize whether the deed was meant to permanently change the property’s character or was simply a strategic financial decision.

Mortgage vs. Title: Why the Difference Matters

One of the biggest misconceptions in property law is the assumption that being listed on the mortgage is equivalent to being listed on the title. These are two different concepts:

• Mortgage: A financial obligation to repay a loan. Spouses may both be responsible for paying a mortgage even if one of them has no ownership rights.
• Title: Legal ownership of the property. The person in the title is recognized as the property’s owner.

This distinction becomes crucial in divorce. A spouse may still owe money on a mortgage, but may have no ownership interest if their name is absent from the deed. California courts frequently step in to examine the fairness of this arrangement when it arises out of a marital transaction.

Community Property vs. Separate Property in California

California’s community property system assumes that any property acquired during marriage is jointly owned. However, there are exceptions:

• Property acquired before marriage remains separate property.
• Inheritances and gifts to one spouse generally remain separate.
• A property’s character can change, but only through a valid written agreement that meets legal standards.

When one spouse transfers property title to the other, courts ask whether the property was “transmuted.” Under California Family Code §§ 850–852, a valid transmutation requires a clear, written declaration showing an intent to change community property into separate property (or vice versa). Without such compliance, a transfer may be voidable, especially if it disadvantages one spouse.

Fiduciary Duty Between Spouses

California Family Code §721 requires spouses to act with the highest duty of loyalty, fairness, and good faith toward each other. This fiduciary duty is similar to that owed between business partners.

When a spouse conveys property to the other, the court presumes that the advantaged spouse had greater bargaining power. Unless they can show that the disadvantaged spouse acted freely, with full disclosure, and often with independent advice, the transfer may be set aside.

In the Marriage of Haines, the court made it clear that property transfers between spouses carry a presumption of undue influence. Together with the Marriage of Barenson, California courts have consistently applied these protections to prevent one spouse from exploiting the other in financial transactions.

Undue Influence and Rebuttable Presumptions

When a spouse transfers property to the other, the law presumes undue influence if the transaction significantly benefits one spouse. This presumption can be rebutted if the benefiting spouse can demonstrate:

• Full disclosure of the terms and consequences of the transfer.
• Independent legal advice obtained by the transferring spouse.
• A voluntary decision without pressure or coercion.

If these elements cannot be shown, courts often invalidate the transfer. This protects the disadvantaged spouse and ensures that marital property remains subject to equitable division.

Practical Divorce Outcomes in Property Transfer Cases

When disputes over property transfers arise in divorce, courts may:

• Invalidate the transfer and restore the property to community property status.
• Order reimbursement to the disadvantaged spouse if they lost equity through the transfer.
• Equalize the division by awarding offsetting assets or spousal support.
• Uphold the transfer if clear evidence shows it was voluntary and consistent with fiduciary duty.

Every case depends on the evidence, the timing of the transfer, and whether the proper legal standards were met.

Preventative Steps for Spouses Considering a Transfer

Couples can avoid future disputes by taking protective measures:

• Seek independent counsel before signing a quit-claim deed.
• Execute a written agreement clarifying intent and whether the transfer is temporary.
• Consider a postnuptial agreement to safeguard ownership rights.
• Document all communications and reasons for the transfer.

These precautions reduce the risk of litigation and demonstrate good faith if the matter ever comes before a court.

FAQs on Spousal Property Transfers

Does refinancing change community property into separate property?

Not by itself. Refinancing a home does not alter the property’s character unless there is a valid written agreement under California Family Code §852.

What if only one spouse is on the mortgage but both are on the title?

The spouse not listed on the mortgage still has ownership rights, but they are not financially liable to the lender. Ownership and debt obligations remain separate considerations.

What if only one spouse is on the title, but both pay the mortgage?

Even if only one spouse holds title, the other spouse may still have a community property interest if marital funds were used to pay the mortgage or improve the property.

Does the timing of the transfer matter?

Yes. A transfer before marriage may be treated differently from one after marriage. Transfers during marriage are subject to fiduciary duty and undue influence presumptions.

What happens if a spouse refuses to transfer the property back after refinancing?

Courts will review whether the transfer was intended to be temporary. If fiduciary duty was breached, the court may invalidate the deed and restore ownership rights.

Do I need an attorney to challenge a quit-claim deed?

Yes. Legal representation is critical when challenging or defending a property transfer in divorce, as the outcome significantly impacts asset division.

Get Legal Help From Reape Rickett

Disputes over spousal property transfers require both legal expertise and a clear understanding of California’s family law system. Whether you are facing divorce, concerned about the validity of a quit claim deed, or uncertain about your property rights, Reape Rickett is here to help.

Our attorneys have decades of experience handling property division, community property disputes, and fiduciary duty cases. We combine legal knowledge with practical strategies to safeguard your future.

Contact Reape Rickett today to schedule a consultation and protect your property rights.