Disclaimer Deed in a Divorce in Arizona
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Disclaimer Deed and Divorce in Arizona
Many people have questions about the effect of a disclaimer deed in a divorce in Arizona. We are going to talk to you about the effect a disclaimer deed has upon ownership of a home in a divorce in Arizona.
We will start our discussion by reviewing the Arizona Court of Appeals’ ruling in the case of Bell-Kilbourn v. Bell-Kilbourne which started with an understanding that all property acquired during a marriage is presumed to be community property.
The Court of Appeals, however, also ruled that spouses in Arizona are free to recharacterize what otherwise would have been community property as the separate property of one of the spouses.
The ruling went on to hold that the husband waived his interest in a home purchase during marriage when he signed a disclaimer deed to that home. This is true regardless of whether community money was used to buy the home.
The Effect of a Disclaimer Deed on Property Rights 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.
The 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.
The 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 the Husband waived his community property interest in the house when he signed the Disclaimer Deed on the home.
The 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. The 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.
The 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 the 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.
Summary of the Effect of a Disclaimer Deed on a House in a Divorce in Arizona
A person who signs a disclaimer deed waives a community ownership interest in a home in Arizona. The parole evidence rule in Arizona holds that a spouse cannot present evidence, such as testimony that there was a reason the disclaimer was signed other than an intention to waive community ownership of the home (i.e., because one spouse could not qualify for the mortgage on the home), to dispute the plain language of the disclaimer deed. The same is true for a spouse who signs a quitclaim deed.
The spouse who signed the disclaimer deed, however, still has a claim for a community lien on the home, which may arguably include the down payment on the home if that down payment was made with community funds. In some cases, the community lien may constitute all or a large majority of the equity in the home which may lessen the financial impact on a spouse who waived a community interest in the ownership of the home by signing a disclaimer deed.
If you need information about the effect of a disclaimer deed in a divorce in Arizona, you should seriously consider contacting the attorneys at Hildebrand Law, PC. Our Arizona divorce attorneys have over 100 years of combined experience successfully representing clients in divorce cases in Arizona.
Our family law firm has earned numerous awards such as US News and World Reports Best Arizona Family Law Firm, US News and World Report Best Divorce Attorneys, “Best of the Valley” by Arizona Foothills readers, and “Best Arizona Divorce Law Firms” by North Scottsdale Magazine.
Call us today at (480)305-8300 or reach out to us through our appointment scheduling form to schedule your personalized consultation and turn your Arizona divorce case around today.
Arizona Family Law Attorneys in Scottsdale and Tucson Arizona
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Chris Hildebrand wrote the information on this page 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.