Disclaimer Deed in a Divorce in Arizona | Waiving Community Property Interest in a Home
Disclaimer Deed and Divorce in Arizona
Many people have questions about the effect of a disclaimer deed in a divorce in Arizona. The Arizona Court of Appeals in the case of Bell-Kilbourn vs. Bell-Kilbourn made a decision regarding the effect of a Disclaimer Deed in a divorce in Arizona. The disclaimer deed in that divorce was signed on a home purchased during an Arizona marriage.
The parties were going through a divorce in Arizona. The parties were married on February 15, 2000. After their marriage, the husband and wife bought a home. They decided to apply for a loan in Wife’s name only because the husband’s credit rating was low.
As a result, the home was titled in Wife’s name only as her sole and separate property. Husband signed a Disclaimer Deed indicating he waived any community property interest in the home. The Disclaimer Deed also stated the home would be Wife’s separate property. The parties paid the mortgage with community funds throughout their marriage.
During their divorce, the divorce court ruled that the husband and wife intended the home to be community property when they bought the home. The divorce court also decided the husband did not intend to gift his community property interest in the home to Wife as her sole and separate property. The divorce court made this ruling despite the Disclaimer Deed signed by the husband stating the property was to be the wife’s sole and separate property. Wife appealed the divorce court’s decision.
The Arizona Court of Appeals, in this case, started with the presumption that all property acquired during a marriage in Arizona is presumed to be community property. It also stated that property purchased during a marriage continues to be community property throughout the marriage, pursuant to another court of appeals case called Honnas v. Honnas.
The Arizona Court of appeals, however, also recognized a prior court of appeals decision in the case of Bender v. Bender. In the Bender case, the court of appeals stated spouses are free to determine the status of their property during a marriage as either sole and separate property or community property. The Arizona Court of Appeals concluded that Husband waived his community property interest in the house when he signed the Disclaimer Deed on the home.
Husband argued this case was different from the facts in the Bender case. He argued that, unlike the Bender case, community funds were used to purchase this house. Husband argued the Bender case involved a spouse using sole and separate funds to buy the house.
The Arizona Court of Appeals rejected the Husband’s argument. The Court of Appeals stated the Bender decision was not based upon whether separate or community funds were used to purchase the property. Instead, the sole existence of a Disclaimer Deed signed by a spouse controls whether a home purchased during marriage is a spouse’s sole and separate property. The Court of Appeals also noted the husband was not claiming his signing of the Disclaimer Deed was because of fraud or a mistake.
The Arizona Court of Appeals indicated the intention of the parties becomes irrelevant when a Disclaimer Deed is signed. When a Disclaimer Deed is signed, the plain language of that document controls. A Disclaimer Deed signed by the husband waiving any community property interest in the home and providing the home will be the wife’s sole and separate property means the home is the wife’s sole and separate property.
The Court of Appeals also rejected the ruling in the case of In Re Sims’ Estate. The ruling in the In Re Sims’ Estate case allowed a court to consider the intention of the parties when a home is acquired during a marriage.
The Court of Appeals court justified its distinction of the In Re Sims’ Estate case by pointing out that the husband in this case never had an ownership interest when the home was purchased.
Wife rebutted the presumption that the home bought during the marriage as community property by introducing the Disclaimer Deed into evidence. The burden of proof then shifted to Husband to present sufficient evidence to establish a community property claim to the home.
Don’t Forget the Community Lien in Arizona
Although the Arizona Appellate Court confirmed the home as Wife’s sole and separate property, it also concluded the husband has an interest in a “community lien” against the home. A community lien may exist when community funds were used to pay the mortgage loan on the home or community resources were used to make improvements to the home that increased the value of the home.
The take away from this case is that a spouse who executes a Disclaimer Deed to a home or other parcel of real estate presumptively waives their community property interest in that property. That spouse has the burden of proving that the signing of that Disclaimer Deed was the result of fraud, mistake or other evidence to establish the home was community property.
The other take away was the recognition of the existence of a community lien against the home. A community lien is not an ownership interest in the home. Instead, it is a claim for community money that was spent on the home. This “community lien” claim is not the equivalent of the amount of the payment made to the mortgage of the home but, instead, is only the extent to which the mortgage balance was decreased.
Also, the community lien is not the amount spent on the home to improve it but, instead, the extent to which those improvements increased the market value of the home. Even then, you should understand that a community lien claim belongs equally to both Husband and Wife. As a result, the amount of the community lien will be divided equally between the spouses.
The Arizona Court of Appeals in the Flowers case held in a separate case that although a separate home was turned into community property during the marriage. A trial court may have the authority to award 100% of that home to the spouse who originally owned it as sole and separate property if it is equitable to do so.
Chris Hildebrand wrote this article about a disclaimer deed in a divorce in Arizona to ensure everyone has access to information about community property laws in Arizona. Chris is a family law attorney at Hildebrand Law, PC. He has over 24 years of Arizona family law experience and has received multiple awards, including US News and World Report “Top Arizona Divorce Attorneys”, Phoenix Magazine “Top Divorce Law Firms”, and Arizona Foothills Magazine “Best of the Valley” award. He believes the policies and procedures he uses to get his clients through a divorce should all be guided by the principles of honesty, integrity, and actually caring about what his clients are going through.