Since the Acquisition of Property Preceded the Effective Date of the Statute, Reimbursement of Separate Property Contributions was Not Allowed

While married, Harry and Mary Lou purchased a Palm Dessert condominium. Although Harry paid the entire $198,000 purchase price from his separate property, the title was taken in both parties’ names, as community property. The parties separated in June 1983, and Mary Lou’s Orange County divorce lawyer filed a petition for divorce. At trial, Harry’s Orange County divorce attorney requested reimbursement of his separate property contributions to community assets. There was no written waiver of reimbursement. Harry’s Orange County divorce attorney based his claim on Section 4800.2, which permits reimbursement of separate property contributions to community assets, absent a written waiver reimbursement. Although Section 4800.2 was in effect when the dissolution petition was filed, the Orange County divorce court refused to apply it because the acquisition preceded the effective date of the statute; and Harry’s Orange County divorce attorney appealed.

In July 1983, the Legislature added Sections 4800.1 and 4800.2 abolishing the long-standing rule that separate property contributions to community assets were presumed gifts in the community in the absence of a contrary agreement. “Under the new law, no agreement is needed: the tables are turned so that the separate property interest is now preserved unless the right to reimbursement s waived in writing.” In re Marriage of Fabian (1986) 41 Cal.3d 440, 450. Section 4800.2 holds that unless a party has made a written waiver of the right to reimbursement, the party shall be reimbursed for his or her contributions to the acquisitions of the property to the extent the party traces the contributions to a separate property source. In In re Marriage of Fabian the Court held although retroactive application of Section 4800.2 would decrease wife’s interest in the property, a right which vested upon acquisition, it also acknowledged that “impairment of a vested property interest, alone, does not invalidate retroactive application of a statutory measure.” Id. at 448. Furthermore, the “[T]he significance of the state interest served by the law, the importance of the retroactive application of the law to the effectuation of that interest, the extent of reliance upon the former law, the legitimacy of that reliance, the extent of actions taken on the basis of that reliance, and the extent to which the retroactive application of the new law would disrupt those actions.”’ Id. With those factors in mind, the Fabian Court concluded retroactive application of Section 4800.2 was not ‘necessary to subserve a sufficiently important state interest,’ and therefore could not be constitutionally permitted. Ibid.

The Fabian Court expressly limited its holding to cases pending on January 1, 1984, leaving undecided the question of whether Section 4800.2 is constitutional as applied to dissolution actions filed after the effective date of the statute, but involving property acquired before that time. However, in April 1986, urgency legislation was enacted providing that Sections 4800.1 and 4800.2 now apply to “proceedings commenced on or after January 1, 1984, regardless of the date of acquisition of property subject to the proceedings or the date of any agreement affecting the property. Here Respondent acquired a community property interest at a time when the only method of defeating or diminishing that right was by proof of an agreement to the contrary. By the time Section 4800.2 was enacted, the parties were already separated. Mary Lou, therefore, had little, if any, opportunity to obtain a written waiver of Harry’s right to reimbursement for his separate property contribution. Therefore, the Orange County divorce judgment was affirmed.

In re Marriage of Hopkins & Axene, 199 Cal.App.3d. 288 (1987)