An older woman (Ann) comes into your law office in a very distraught state. Her husband (Frank) of 26 years told her that he has fallen in love with their 30-year-old neighbor (Sheila), he wants a divorce, and she needs to move out of his house within two weeks. When she asked why it was “his” house, he said that he owned it free and clear before marriage, so it was his separate property. He said that Ann needed to leave because Sheila was moving in and starting a major remodel, including tearing out Ann’s prize-winning heirloom rose beds to put in a hot tub. She is heartbroken and doesn’t want to leave her home.
Ann remembers that Frank put her name on the title on their 20th wedding anniversary. She also recalls that they took out a HELOC for a major remodel and after that was completed,1 they held a huge party where Frank loudly proclaimed to the hundred or so guests that “they built this home together, owned it together, and would live there together for the rest of their lives.” How can you help Ann keep the home, even if she doesn’t keep the marriage?
Where to Start
A trial court must examine specific factors in determining a just and equitable property division at a dissolution of marriage. These factors include: 1) the nature and extent of the community property; 2) the nature and extent of the separate property; 3) the duration of the marriage or domestic partnership; and 4) the economic circumstances of each spouse or domestic partner at the time the division of property is to become effective.2 As an initial matter however, whether the house is community or separate property may not matter in a dissolution proceeding because all property is before the court for a just and equitable distribution.3 Thus, even if Frank is correct in the home’s characterization as his separate property, that asset could still be awarded to Ann.
In determining a separate versus community property analysis however, the name under which a property is held is not determinative as to whether that property is community or separate in nature.4 As relevant to the matter at hand, quitclaim deeds are specifically discussed in the 2022 Washington Supreme Court case of Marriage of Watanabe.5 In Watanabe, the parties married in 1999 and divorced in 2016. During the marriage, the wife (Solveig) had received various real properties as an inheritance after her mother’s passing. In 2005, the parties decided to buy property in Ford, Washington, to continue their business of raising Norwegian Fjord horses. Financing this purchase required a bank loan, and a loan condition was that Solveig add her husband’s (Daniel’s) name to the title of her inherited (50% ownership) Arlington farm as Solveig had no credit history at the time. In order to obtain the loan, Solveig quitclaimed her 50% interest in the Arlington property to herself and Daniel “to establish community property.”
At trial, Solveig testified that she did not recall signing the quitclaim deed and never intended to convert her separate property inheritance into community property. The trial court held that the Ford property and two others were separate in nature. Daniel appealed.
The Court of Appeals applied In re Estate of Borghi,6 expanding its holding that the placing of a spouse’s name on a title or deed does not evince any intent to transmute separate property into community property as “[t]here are many good reasons it may make good business sense for spouses to create joint title that have nothing to do with any intent to create community property.”7 The Court of Appeals upheld the trial court, further holding that the use of extrinsic evidence was permissible to show Solveig’s intent in regard to the property’s character. Daniel sought certiorari, arguing that the court erroneously expanded the holding of Borgi and that extrinsic evidence may only be introduced to clarify an unambiguous deed. The Supreme Court granted review.
Upon review, the court noted the hundred-plus-year-old case Voltz v. Zang,8 also relied on by the Borgi court, for the proposition that property changes from separate to community “when the parties intend such a change to take place and evince this intention by a conveyance conforming in all essentials to the requirements of the law affecting the transfer of real property.”9 The Watanabe court found no such intent by Solveig.
Parol Coming into Play
Extrinsic evidence comes from the field of contract law and is used to determine the meaning of specific words and terms used in a contract by looking at the context in which the contract was made. While it cannot be used to vary, contradict, or modify a contract, it can be used to determine the parties’ intent. This includes evidence of parties’ conduct and subsequent acts when making the contract and the reasonableness of the parties’ interpretations.10 Parol evidence is a form of extrinsic evidence arising from oral or verbal statements and it is well established that parol evidence may be used to establish the intent of a grantor.11
In the case of Watanabe, Solveig’s testimony at trial concerning her intent provided the extrinsic evidence needed to prove that the property should not be considered community. Due to the fact that Solveig would not have been able to obtain the loan without signing the quitclaim deed, Solveig’s expectation that signing the deed would not convert the property to community was a reasonable one.
Courts may also look to evidence of prior dealings when determining intent to convert separate property into community property. Following Watanabe, Division II of the Court of Appeals issued an (unreported) ruling in Matter of Milles.12 In Milles, one spouse (Christopher) had been previously divorced. During his first marriage, he signed a quitclaim deed giving title of his house to himself and his first wife (Cara) and testified that it was his intention to convert the home into community property. He further agreed in the divorce settlement that the home was community property and Cara’s interest in the home was paid out accordingly. During his marriage to the opposing party (Denise), he refinanced the home to assist with paying off community credit card debts. At the time, the parties’ finances were co-mingled and these co-mingled funds were used to contribute to mortgage payments.
In order to refinance the home, the bank required and had prepared, a quitclaim deed stating, “Christopher D. Milles, a married man for and in consideration of to establish community property conveys and quit claims to Christopher D Milles and Denise M Milles, husband and wife the following described real estate.”13 At trial, Christopher testified that by signing this deed he did not intend on converting the home to community property and that he had signed the deed without fully reviewing it. However, the trial court ruled, and the court of appeals confirmed, that the home had been successfully converted to community property. A primary basis for this ruling was due to the fact that Christopher had successfully and intentionally converted the home into community property via quitclaim deed during his first marriage to Cara. Additionally, the court reasoned that by comingling their funds, Denise had contributed to the house’s mortgage, which was consistent with an intent to convert the home to community property. Christopher’s meticulous handling of the parties’ finances also ended up weighing against him, as the court found it “was evidence that he would not have overlooked the language in the quitclaim deed.”14
In crux, Watanabe stands for the proposition that extrinsic evidence may be used to show a spouse’s intent in signing a quitclaim deed, and thus may be a factor in characterization of the property as community or separate in a dissolution proceeding. In the matter at hand, the facts of Ann’s case are distinguishable from Watanabe. Frank did not add Ann to the title to secure a loan, as was the case in Watanabe,15 but rather arguably as a 20th anniversary present and gift to her. Further, after the successful remodel, Frank announced to over 100 guests that they “they built this home together, owned it together, and would live there together for the rest of their lives,” thus evincing an intent for coownership. The savvy practitioner thus can make a convincing argument that Frank’s actions transmuted the separate property into property that is community in nature, thus assuring Ann a higher likelihood of being awarded this asset in a dissolution trial.
Elizabeth Yina Finch is an attorney in the Kirkland office of McKinley Irvin, PLLC. Her practice focuses on divorce, child support litigation, and complex parenting matters.
Kim Schnuelle is a senior attorney in the Seattle office of McKinley Irvin, PLLC. She has over 30 years of family law experience and her practice focuses on divorce, international family law issues, child support litigation, and complex parenting plan matters.
1 Payments on this “home equity line of credit” were in all likelihood made with community funds. If so, this payment structure would create a community lien on the home in any event.
2 RCW 26.09.080.
3 Marriage of Griswold, 112 Wn.App. 333, 339 (2002).
4 Marriage of Mueller, 140 Wn.App. 498, 501 (2007), Marriage of Skarbek, 100 Wn.App. 444, 448-49 (2000).
5 199 Wn.2d 342 (2022) (en banc).
6 167 Wn.2d 480 (2009) (plurality opinion).
7 Id. at 352.
8 113 Wash 378, 383 (1920).
9 Matter of Marriage of Watanabe, 199 Wn.2d at 352 (quoting Volz v. Zang, 113 Wash. At 383 (1920) (emphasis in original Watanabe decision).
10 RSD AAP, LLC v. Alyeska Ocean, Inc., 190 Wash. App. 305, 315, 358 P.3d 483, 488 (2015).
11 Scott v. Currie, 7 Wn.2d 301, 308, 109 P.2d 526 (1941) (stating an intent to transmute property may be proved by parol evidence).
12 32 Wash. App. 2d 1018 (2024). (See GR 14.1 re citations to unreported opinions.)
13 Id. at 2.
14 Id. at 7.
15 See also In re Est. of Finn, 106 Wash. 137, 179 P. 103 (1919) (addition of husband to a loan as required by the lender did not make a separate obligation into a community obligation).
