Improvements Flashcards
What are improvements?
Attached to existing property and cannot be sold separately from the property itself (e.g., addition of swimming pool, new rooms, adding a house to plot of land)
What happens when one Spouse Uses Their Separate Property to Improve Other Spouse’s Separate Property
PRE-2005 Rule – The SP Contributor has no right to reimbursement
There is a rebuttable presumption that the SP contribution was a gift to other spouse
Can be rebutted with an agreement indicating it’s not a gift
- Before 1985, written, oral, and implied agreement are okay
- 1985 or later, written agreements only
2005 AND AFTER Rule – SP Contributor has a right to reimbursement of the SP used to improve the other spouse’s SP if they can trace to SP funds
There is no right to any interest or appreciation generated by property
- Spouse who owns the property is entitled to appreciation
Can contract away the right to reimbursement by a written waiver stating that the SP is a gift or by transmutation
Retroactive Application to SP Contributions for Acquisitions or Improvements Made Before 2005
Law is unsettled
Property acquired and improvements made prior to 2005 (both prior)
- likely no retroactive application, assume it’s a gift and right to reimbursement
Property acquired prior to 2005, but improvements made after 2005
- Prof says probably the date of improvement controls
One Spouse Uses Community Property to Improve Other Spouse’s Separate Property (PRE 1975 RULE)
PRE-1975 RULE
H is manager and controller of CP, when he uses CP to improve W’s SP, H is deemed to have given a gift and there is no right to reimbursement, unless there is an agreement regarding reimbursement
- As manager and controller by law, he is deemed to know what hes doing when he uses his SP to improve the other’s
When a spouse attempts to improve his own property with community funds, the injured spouse is entitled to either the amount expended or the value added, whichever is greater, so that there is no benefit from the breach of trust
Community can benefit from the appreciation that is attributed to the improvement
b. Neither party intended it to be a gift, so presumption that it’s a gift is rebutted, community has right to reimbursement
One Spouse Uses Community Property to Improve Other Spouse’s Separate Property (1975-2000 RULE)
Spouses now have equal management and control of CP, we assume it is a gift when CP funds are used to improve the other spouse’s SP
Comes up when one spouse makes the decision alone to spend CP on their own SP, look for a spouse that acts as “sole manager” or “without other spouse’s knowledge/consent”
One Spouse Uses Community Property to Improve Other Spouse’s Separate Property (2001-PRESENT RULE)
The Community is entitled to reimbursement without interest or appreciation (gift presumption eliminated)
Retroactive Application Rule is Unclear, Spouse whose SP was improved would argue they had a vested right not to reimburse
One Spouse Uses Community Property to Improve Their Own Separate Property (Pre-1975 Rule)
H is manager and controller of CP, so when he uses CP to improve his own SP, the community is entitled to reimbursement, unless W consented to the use of the CP funds
This is presumed to be unjust enrichment absent W’s consent
- If husband use community funds to improve his wife separate property, then it’s a gift.
- A presumption can be rebutted by showing it was not intended as a gift.
One Spouse Uses Community Property to Improve Their Own Separate Property (1975-1983 Rule)
Spouses now have equal management and control of CP, if either spouse uses CP for their own benefit, the Community is entitled to reimbursement unless the other spouse consented to the use of the funds
Consent can be given by written, oral, or implied agreement
One Spouse Uses Community Property to Improve Their Own Separate Property (1984-2001 Rule)
If either spouse uses CP for their own benefit, the Community is entitled to reimbursement unless the other spouse consented to the use of the funds
Consent can be given by written agreement only
One Spouse Uses Community Property to Improve Their Own Separate Property (2001-Present Rule)
Other spouse entitled to reimbursement, unless WRITTEN agreement
Idea that spouse, at divorce, would expect reimbursement even if they consented at the time
Reimbursement can be amount spent or value added, whichever is greater
One Spouse Uses Their Separate Property to Improve Community Property
Pre-2005 – Likely considered a gift to the community
2005 Legislation - SP Contributor gets right to reimbursement (without interest) for SP funds used to improve CP
