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Community and Non-Community Property

When spouses purchase property, ownership rights may be an issue. Property may be considered community or non-community property. It depends on the jurisdiction the married couple resides in. If the couple lives in a community property state, the state laws will consider each spouse owners of the property acquired during the marriage. Unless the property was acquired by an inheritance or by a gift from the other spouse, each individual will have one-half ownership rights to the property. Accordingly, there are only nine states that have community property laws (Arizona, California, Idaho, Louisiana, Nevada, New Mexico, Texas, Washington and Wisconsin). If a married couple resides in one of these nine states and acquires property while living in the state, that property will be considered owned by each spouse. Alternatively, if a couple purchases property in a non-community property state (the majority of the states are non-community property states), the spouse who purchases the property may be considered the sole owner.

Property ownership may be questioned if a married couple lives in a community property state and moves to a non-community property state, or vice versa. The state in which the couple lived when they (or one spouse) acquired property is the law that applies when determining ownership of that property. Therefore, if a couple purchases property while living in a community property state it is considered owned equally by each spouse. If the couple moves to a non-community property state, the previously acquired property is still considered owned equally by each spouse. The same is true for a couple living in a non-community property state that moves to a community property state, the property is still owned by the spouse who acquired it.

Effects of Divorce on Property Ownership

If a married couple is going through a divorce or legal separation, ownership of property may become a point of dispute. The main issue is if the property has increased in value and which spouse has ownership rights over the appreciation. In general, if neither spouse has contributed to the increase in any way, the amount of appreciation is owned by the spouse who owns the property. If the property is considered non-community, the spouse who acquired the property has ownership rights over the property value increase. Likewise, if community property increases in value, both spouses own the appreciation equally.

However, if either spouse (or both) contributed (or caused) to the appreciation of the property, ownership rights may differ. It depends on the jurisdiction that the couples reside in; courts treat ownership rights differently according to the jurisdiction and the facts of the case. For instance, some courts may consider the increase in value of non-community property as owned by each spouse (community property). The court will make their determination based on the actions, efforts and contributions of the couple. Based on the evidence, the court may determine that the increase in value was due to marital funds or equal effort by each spouse, thus making the appreciation community property. The outcome of each case is dependent on the jurisdiction, the court and the contribution or action of each spouse.

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