## Facts

- Michael A. Grappo and Tillie D. Grappo married in 1974 and were found to have separated in 1979, without resuming a shared residence thereafter.
- In 1977, Tillie acquired Nevada real property at 1046 Lakeshore Drive, Incline Village, in her name as her separate property using loan proceeds she obtained.
- Michael knew and acknowledged that the property was acquired and held as Tillie’s separate property.
- The parties maintained separate finances and property holdings, supported by evidence of a settled practice and understanding to keep assets separate.
- After the separation, a residence was constructed on the Nevada property; Michael contributed money and services toward construction and management.
- Michael treated his monetary advances as loans expecting repayment, but did not obtain a deed of trust or other formal security interest on the Nevada property; Tillie refused to provide such security.
- Recorded interests in the property were held by third parties, including a lender and title-related entities, and Michael sought priority over those interests via a community property claim or an equitable lien.

## Issues

1. Whether Michael had a community property interest in Nevada real property acquired in Tillie’s name as her separate property, despite his later contributions to construction after the parties’ separation.
2. Whether Michael was entitled to an equitable lien based on his advances and services, and if so whether it could take priority over recorded third-party interests.

## Decision

- The Court of Appeal affirmed the judgment for defendants.
- The court held Michael had no community property interest in the Nevada property.
- The court held Michael was not entitled to an equitable lien on the property.
- The court held Michael had no interest in the property entitled to priority over the recorded claims of the other defendants.

## Legal Principles

- Real property acquired in one spouse’s name as separate property, with that spouse’s separate funds (including loan proceeds obtained by that spouse), remains separate absent proof of an agreement or facts sufficient to change its character.
- A spouse’s post-separation expenditures or services relating to the other spouse’s separate property do not, without more, convert the property to community property.
- When advances are treated by the advancing spouse as loans with an expectation of repayment, equity may decline to recharacterize them as creating an ownership interest or impose an equitable lien.
- An equitable lien may be denied where the claimant knowingly proceeds without obtaining formal security, particularly when imposing a lien would impair the reliance interests of recorded third-party claimants.

## Conclusion

The court affirmed that the Nevada property remained the wife’s separate property and refused to impose an equitable lien for the husband’s post-separation, unsecured loan advances and services, leaving him without any priority over recorded third-party interests.


Grappo v. Coventry Fin. Corp., 235 Cal. App. 3d 496 (Cal. Ct. App. 1991)