Bell-Kilbourn v. Bell Kilbourn – 10/23/2007
Arizona Court of Appeals Division One Holds That Real Property Acquired During a Marriage Is Not a Community Asset If, at the Time the Property Was Acquired, One Spouse Executed an Enforceable Deed Disclaiming an Interest in the Property.
Husband and Wife purchased a house while they were married. In order to obtain financing, the house was purchased as Wife’s sole and separate property and Husband executed a disclaimer deed renouncing any interest in the house. Husband later filed for dissolution of the marriage. The family court ruled that the house was a community asset in light of the parties’ intent.
Citing Bender v. Bender, 123 Ariz. 90, 597 P.2d 993 (App. 1979), the Arizona Appeals Court vacated in part, holding that Husband’s disclaimer deed was sufficient to rebut the presumption that the house was community property. “[M]arried couples are free to determine the status of their property,” and absent fraud or mistake, disclaimer deeds are enforceable. The court rejected Husband’s argument that in addition to the execution of the disclaimer deed, Wife was required to show contemporaneous conduct demonstrating Husband’s intent to convey his property interest. The contemporaneous conduct requirement did not apply because, unlike cases where one spouse conveys a property interest to the other spouse, Husband never had an interest in the house to begin with. The court also rejected Husband’s argument that the house was community property because community funds were used to acquire the house. In fact, community funds were not used to purchase the house, however, they were used to pay the mortgage and maintain, repair, and/or improve the property. Because those subsequent payments gave the community an interest in the house’s equity, the Court remanded so the family court could determine the extent to which Husband was entitled to share in the house’s equity.
Judge Timmer authored the opinion; Judges Barker and Orozco concurred.