HISTORY OF THE PROPERTY
The wife bought a residential property before her relationship with the husband. After the parties got married, the husband and his children moved in with the wife. Both parties testified they frequently argued about money and finances. When they argued, the wife would say the house was hers.
They refinanced the house to pay other debts in 2017. The bank prepared the documents, including a deed. The wife testified she thought she was just refinancing, but she signed a special warranty deed adding the husband as a grantee. The deed stated its purpose was to add the grantor’s spouse to the title and change the wife’s name on the deed. The parties testified the bank prepared the documents and they had not sought the advice of an attorney regarding the documents. The wife also said she had not asked the bank to add the husband’s name to the deed. She said she did not intend to give him part of the property. The husband objected to this testimony regarding the wife’s intent, arguing it violated the parol evidence rule, but the court allowed the testimony.
The trial court concluded the house was the wife’s separate property and entered a final divorce decree.
APPEALS COURT CONSIDERS PRESUMPTIONS
Property’s character is determined when the party first accrues rights in IT. Generally, property owned before the marriage is separate property. Community property is all property acquired by either spouse during the marriage, except separate property.
The husband argued that, although the property was the wife’s separate property when they got married, she transferred him a half-interest as his separate property. The husband argued that the terms of deed could not be changed by parol evidence. He argued that the wife presumptively conveyed a half-interest to him as separate property when she signed the deed and could not use parol evidence to rebut that presumption.
The wife argued she never intended to gift a share of the property to the husband and that she still owned the full interest in the house. She argued the deed did not include a separate property recital, so there was a rebuttable presumption it was a gift, which she rebutted with evidence she did not intend to gift an interest in the property.
The appeals court noted that the parties were each arguing for the application of a different presumption. Although the court generally starts with the presumption that all property in a marriage is community property, there is also a presumption that property is separate if the instrument that conveys it contains a separate property recital stating that the consideration for the purchase comes from a spouse’s separate property or that the title is to be vested as separate property for the separate use of the spouse receiving it. A separate property recital is conclusive if the spouse challenging the separate property characterization was a party to the transaction because the parol evidence rule prohibits evidence outside the document.
In this case, the wife was a party to the transaction, but the appeals court concluded there was no separate property recital. There was therefore no separate property presumption. Both spouses were listed as grantees and there was no language indicating the husband would receive an interest as separate property.
The appeals court rejected the husband’s argument that the language stating the deed’s purpose was to add him to the title constituted a separate property recital. The appeals court pointed out that language did not state he received an interest as separate property. The appeals court concluded the separate property presumption did not apply as to any interest the husband may have in the property.
The wife argued that a conveyance between spouses raises a rebuttable presumption the interest was a gift. She further argued that parol evidence is admissible to rebut that presumption. The appeals court noted that the elements of a gift are intent, delivery, and acceptance. The person transferring the property must intend to make a gift at the time the transfer occurs. The person claiming a gift generally has the burden, but, for a conveyance between spouses, there is a presumption the transfer was a gift. The grantor spouse has the burden to produce evidence showing they did not intend to make a gift.
The appeals court concluded the gift presumption did apply, but parol evidence of the wife’s intent was admissible to rebut it.
APPEALS COURT UPHOLDS JUDGMENT
The testimony from the parties conflicted. The wife said she thought she had to sign the documents to refinance the house. She said she had not intended to give an interest to the husband. The husband testified they had talked about adding him to the title so he could stay in the house if something happened to the wife.
The trial court could have determined the wife rebutted the gift presumption with her testimony she did not intend to gift an interest to the husband. The trial court was then free to make credibility determinations regarding the testimony.
With no findings of fact and conclusions of law and viewing the evidence in the light most favorable to the trial court’s judgment, the appeals court found no abuse of discretion. The appeals court affirmed the judgment.
CALL MCCLURE LAW GROUP
This case illustrates the importance of reading and understanding the legal documents you sign and seeking counsel if you do not understand them. Although the court in this case found in favor of the wife, that decision appears to be based on a credibility determination that could easily have gone the other way. If you have a dispute over whether property is separate or community, a skilled Texas divorce attorney can help. Set up a consultation with McClure Law Group at 214.692.8200.