Recording of a Homestead is Insufficient to Change Separate Property Into Community Property

In Arizona, property owned by a spouse before marriage is their separate property. If they transfer an interest to the other spouse, the property status can change to community property. However, actions must be taken that show a clear intention to gift the property to the community. In re: Estate of Sims 542 P.2d 1123 (1975), the Court of Appeals discussed this issue.

In the case of the Sims, a surviving wife appealed a ruling that the family home was the separate property of her deceased husband. She argued that her spouse changed the status of the property to community property.

Facts of the Case

Mr. Sims and Mrs. Sims married and lived together in a property husband owned before the marriage. They each had children from prior marriages who also lived with them. Mr. Sims named it homestead property.

When the husband died, the probate court awarded wife the property for an 18-month period. The court awarded all other interest in the property to the heirs of husband. Wife appealed.

Transforming Separate Property

All parties agreed that the property belonged to Mr. Sims before the marriage. Therefore, it was his separate property. Under Arizona law, the Court said, property generally keeps its separate property status during a marriage.

Property can become community property, however, by agreement or by operation of law. Here, wife claims that the house became community property.

In 1966, a court ordered Mr. Sims to pay a judgment against him secured by the house. If he didn’t pay, he would lose the house. The couple paid the judgment with community funds and and recorded a homestead in both their names.

The Court of Appeals found that this did not change the status of the property to community property. It said that it found no evidence that this was husband’s intention.

Other Evidence of Intention

Mrs. Sims presented evidence that the couple and their children from prior marriages used the house as the family home. They lived there throughout the marriage.

The couple paid the mortgage with community property funds. And Mr. Sims recorded a homestead exemption on the property. The Court of Appeals remained unpersuaded. It said that wife’s evidence was not sufficient to show a transmutation of the property to community property.

Disposition of Homestead

Arizona law specifies what happens in probate to homestead property that is the separate property of the deceased. Title to the property vests in the heirs of the deceased. However, the probate court can award use of the property to the surviving spouse for a limited period. Here, the probate court awarded use of the property to Mrs. Sims for 18 months. The Court of Appeals said that this was not an abuse of discretion.