“Hi Honey, I decided to keep your 1/2 of the house…” Not.

Conveyance of title from one spouse to another for refinancing does not transfer ownership of community property.

A married couple decided to refinance their home, which was community property. Due to the wife’s poor Fair Isaac Corporation (FICO) score, the wife conveyed her legal interest in title to her husband in order to obtain a lower interest rate on refinancing, expecting her husband to reconvey her interest in title after refinancing. The husband refinanced the home, but refused to deed back her legal title to the property. The wife sought to recover her legal interest in the property on dissolution of the marriage, claiming she retained her right to ownership of the home as community property since she did not transfer her community property right to ownership when she transferred her legal interest in title for the purposes of refinancing. The husband claimed his wife did not retain her community property right to ownership since she relinquished her right to ownership of the property when she delivered legal title. A California court of appeals held a spouse who transfers legal title in community property to their spouse in expectation that legal title will be returned upon refinancing of the property retains their community property right to ownership since the transfer of legal title to another spouse for the purpose of refinancing does not terminate the spouse’s community property ownership rights. [In re Marriage of Fossum (2010) 192 CA4th 336]