MARRIAGE AND REAL ESTATE PRESENTED BY

LOUISIANA IS A COMMUNITY PROPERTY STATE Based in Civil Law tradition At termination of marriage, community property is split 50/50

MATRIMONIAL REGIMES COMMUNITY OF ACQUETS AND GAINS CONTRACTUAL REGIME JUDGMENT OF SEPARATE PROPERTY

COMMUNITY OF ACQUETS AND GAINS The legal regime under LA law Arises by default Sets forth rules of ownership and management of property owned by spouses

COMMUNITY OF ACQUETS AND GAINS Applies to all spouses domiciled in LA regardless of domicile at time of marriage or place of marriage Each spouse owns a present undivided one-half The alienation, lease, or encumbrance of a spouse's undivided interest in community property during the existence of the community is an ABSOLUTE NULLITY

CONTRACTUAL REGIME LA legislature’s recognition of freedom of contract Spouses “opt out” of the legal regime Can opt out entirely or partially

CONTRACTUAL REGIME cont’d Ante-Nuptial (Pre-Nup) Agreement - before marriage No court approval required Done by authentic act or act under private signature duly acknowledged Must be recorded in Parish where real property is located to affect 3rd parties

CONTRACTUAL REGIME cont’d Post-nuptial Agreement - during marriage Can modify or terminate the Legal regime Court approval is required unless: Spouses have been domiciled in LA for less than a year Spouses are opting into the Legal Regime What if spouses live here, move out of state, and then come back? Price v. Wise

CONTRACTUAL REGIME cont’d Post Nuptial Agreement --- Joint petition must show Court that: it is in both of their best interests and that they understand the governing principles and rules Must be recorded in parish where real property is located to affect 3rd parties

JUDGMENT OF SEPARATION OF PROPERTY Can be done by motion of either spouse for reason of: Mismanagement by one spouse Absentee spouse Pending divorce Physical separation

CO-OWNERSHIP After termination of the community property regime, the provisions of Louisiana law regulating co-ownership apply unless there is a contrary provision of law or judicial act

CO-OWNERSHIP cont’d LA CC art. 480 --- Two or more persons may own the same thing in indivision, each having an undivided share

CO-OWNERSHIP cont’d A co-owner may alienate or encumber his undivided interest Consent of all co-owners is required for alienation or encumbrance of the entire property Co-owners may agree to restrict alienation up to 15 years

CO-OWNERSHIP cont’d LA CC art. 2369.4 (1995) --- A spouse may not alienate, encumber or lease former community property or his undivided community property interest in that property without the concurrence of the other spouse and that in the absence of such concurrence, the alienation, encumbrance or lease is a relative nullity

CO-OWNERSHIP cont’d A spouse has the right to demand partition of former community property at any time --- A contrary agreement is absolutely null If the spouses are unable to agree on the partition, either spouse may demand judicial partition

DISCUSSION: WHO NEEDS TO SIGN THE PURCHASE AGREEMENT?? If you are dealing with a married couple, you should presume that both need to sign. What if they are going through a divorce? What if one says it is their separate property?

CLASSIFICATION OF ASSETS Either Community or Separate Classification made at the time of acquisition Property owned by a married person is presumed community

COMMUNITY PROPERTY Property acquired by either spouse through effort or skill Wages earned during community, regardless of when they are paid Disability benefits – payable in lieu of wages Retirement benefits – to the extent earned during community

COMMUNITY PROPERTY cont’d Property acquired with Community Things Joint Donations Fruits of both community and separate property (unless reserved) Damages for loss of community property ALL NON-SEPARATE PROPERTY

SEPARATE PROPERTY Property acquired before marriage Property acquired with separate property Ex. exchange Inherited Property Fruits separate property reserved Damages for mismanagement of community Damages to separate property Personal injury damages Property acquired by voluntary partition

CLASSIFICATION PROBLEMS Commingling of funds Does not change classification, but makes it hard to overcome community presumption Credit sales / Bond for Deeds Determined by date of transfer Acquisitive prescription / Adverse possession Determined at conclusion of period

CLASSIFICATION PROBLEMS Donations Depends on the intent of the donor Lottery / Sweepstakes winnings

TRANSMUTATION – Change in Classification From community to separate – When one spouse donates his undivided interest in a community thing to his spouse, the entire interest in that thing becomes separate property of the donee spouse. From Separate to Community – A spouse may transfer his separate property to community property by stipulating that the thing transferred “shall be part of the community.”

CLASSIFICATION OF OBLIGATIONS An obligation incurred by a spouse may be either a community obligation or a separate obligation

COMMUNITY OBLIGATIONS Obligations of married persons are presumed community An obligation for the common interest of the spouses or for the interest of the other spouse is a community obligation Includes alimony Includes obligations related to divorce

SEPARATE OBLIGATIONS Incurred prior to the establishment of a community property regime Incurred during the existence of a community, though not for the common interest of the spouses or for the interest of the other spouse

SEPARATE OBLIGATIONS cont’d Obligation resulting from an intentional wrong Obligation incurred for the separate property of a spouse if it benefits both spouses, the family, or the other spouse

CREDITOR’S RIGHTS / REIMBURSEMENT CLAIMS Entire mass of community property is available to creditors for both community and separate obligations If community property is used for separate obligation, reimbursement is due --- ½ of the value of the thing used at the time of use

CREDITOR’S RIGHTS / REIMBURSEMENT CLAIMS cont’d Separate property is available to creditors to satisfy community obligations Reimbursement is due --- ½ of the value of the thing used at the time of use

CREDITOR’S RIGHTS / REIMBURSEMENT CLAIMS cont’d Separate property IS NOT available to creditors to satisfy separate obligations

ALIENATION OF COMMUNITY PROPERTY GENERAL RULE – CONCURRENCE IS REQUIRED TO ALIENATE, LEASE OR ENCUMBER COMMUNITY PROPERTY Property acquired by a married person is presumed community unless their spouse appears in the act to state otherwise Unilateral declaration is not sufficient

EXCEPTIONS Acquisitions Business Entities Recorded Marriage Contract Formal renunciation of right to concur Judicial Authorization

Unauthorized Alienations Considered relative nullity Can be confirmed / ratified Prescribes after 5 years

DECLARATION OF PARAPHERNALITY (SEPARATE PROPERTY) Can be contested by spouse unless they appeared (intervened) in the act Can also be contested by forced heirs and creditors --- in fraud of their rights

IMPROVEMENTS Classified according to ownership of the ground, regardless of whether community or separate funds are used to make them Spouse may be entitled to reimbursement at termination of community

TERMINATION OF LEGAL REGIME Methods of Termination Death Nullity of Marriage Divorce Matrimonial agreement Court order

PARTITION Division of property held in community Changes classification of property from community to separate

JUDICIAL PARTITION Only done after legal regime terminates Spouses submit sworn list of community assets and obligations Court allocates assets and liabilities “equally” May require equalizing payment A partition by licitation may be required if asset cannot be divided evenly

VOLUNTARY PARTITION Does not alter matrimonial regime Only changes classification of property After-acquired property becomes community

DEVOLUTION OF PROPERTY AT DEATH COMMUNITY PROPERTY (INTESTATE)

COMMUNITY PROPERTY DEVOLVES IN THE FOLLOWING ORDER Descendants Naked Ownership to descendants Legal usufruct to surviving spouse If no descendants, surviving spouse takes in full ownership

LEGAL USUFRUCT Ends at Death or Remarriage Usufruct attaches to proceeds of sale May be required to provide security if naked owner is not a child of the usufructuary or is a forced heir

DEVOLUTION OF PROPERTY AT DEATH SEPARATE PROPERTY (INTESTATE)

SEPARATE PROPERTY DEVOLVES IN THE FOLLOWING ORDER Descendants Parents and/or siblings or descendants of siblings lifetime usufruct to parents and naked ownership to siblings Parents in full ownership if no siblings Siblings in full ownership if no parents Surviving spouse not judicially separated More remote ascendants More remote collaterals

DEVOLUTION OF PROPERTY AT DEATH TESTATE

SPOUSE DIES TESTATE Will dictates who takes both separate and community property Subject to limitations of forced heirship laws If all property is not disposed of in the will, the laws of intestacy apply

Same-Sex Marriage (Obergefell v. Hodges) Same-sex couples have the same right as heterosexual couples to marry in every State of the United States Same-sex couples have the right to marriage "on the same terms and conditions as opposite sex couples" No State may refuse to recognize a lawful same-sex marriage performed in another State Each State must recognize a lawful same-sex marriage performed in another State before June 26, 2015, as of the date of the lawful marriage

How does this affect real estate titles? Subject to the laws of community if the property was acquired during marriage Same-sex couple have until June 16, 2016 to opt out of the community regime without court approval Should consider submitting property to community regime if acquired prior to marriage