## Facts

- Before marriage, the husband acquired a one-third interest in a real-estate partnership, Smile Enterprises, by contributing capital at formation.
- During the marriage, the partners executed a modified partnership agreement listing each partner as a “husband and wife” pair and naming the husband and wife together as holders of the one-third interest.
- In dissolution proceedings, the trial court held a separate trial on whether the partnership interest was separate or community property.
- The husband argued the interest remained separate property because there was no valid transmutation under Family Code section 852.
- The wife argued the modified partnership agreement placed the interest in joint title form, triggering the community-property presumption under Family Code section 2581.
- The trial court found the partnership documents satisfied section 852 and treated the partnership interest as community property, and it awarded the wife attorney’s fees.
- The husband appealed the property characterization and the fee award.

## Issues

1. Whether placing a spouse’s premarital separate property into joint title form during marriage triggers the Family Code section 2581 community-property presumption without satisfying Family Code section 852’s transmutation requirements.
2. Whether post-modification loans connected to the partnership created a community interest based on lender reliance on community property to satisfy the debt.
3. Whether the attorney’s-fees award must be revisited if the underlying property characterization was erroneous.

## Decision

- The court held that section 852’s transmutation requirements must be satisfied before section 2581’s joint-title presumption can apply to a spouse’s separate property placed into joint title form.
- The partnership-modification documents did not contain the required express written declaration changing the character or ownership of the husband’s separate property interest.
- The husband’s one-third partnership interest remained his separate property.
- The case was remanded to determine whether lenders intended to rely on community property to satisfy partnership loans and, if so, to determine the community’s proportionate share of the partnership interest.
- The attorney’s-fees award was reversed for a new determination in light of the corrected property rulings.

## Legal Principles

- A transmutation of marital property is invalid unless made in a writing that contains an express declaration by the adversely affected spouse that the property’s characterization or ownership is being changed. (Fam. Code, § 852.)
- The community-property presumption for property acquired during marriage in joint title form does not apply to a spouse’s separate property merely because it is later placed into joint title; the section 852 transmutation requirements must first be met. (Fam. Code, §§ 852, 2581.)
- Even when an asset remains separate property, the community may acquire a proportionate interest if community property is relied on to obtain or secure loans connected to the asset, depending on lender intent and reliance.
- Attorney’s-fees orders tied to an erroneous property characterization must be reconsidered after the correct characterization and any community interest are determined.

## Conclusion

The court ruled that listing spouses together in joint title form did not convert the husband’s premarital partnership interest to community property because the documents lacked an express written transmutation; it remanded for findings on whether community-backed loans created a proportionate community interest and ordered a new attorney’s-fees determination.


In re Marriage of Lafkas, 237 Cal. App. 4th 921, 188 Cal. Rptr. 3d 484 (Ct. App. 2015)