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In re Obedian: Central District Bankruptcy Court Applies Valli To Find Property Held in Joint Tenancy is Community Property

In In re Obedian, 546 B.R. 409 (Bankr. C.D. Cal. March 1, 2016), a Central District Bankruptcy Court recently applied the California Supreme Court case, In re Marriage of Valli, 58 Cal. 4th 1396 (Cal. 2014). In Valli, the California Supreme Court found, that in an action between spouses, Cal. Fam. Code § 760 (property acquired by a married person during marriage) controls in purchases from a third party and thus the transmutation requirements apply. Specifically, the California Supreme Court found that while the form of title presumption under Cal. Evid. Code § 662 may sometimes apply, it does not apply when it conflicts with the transmutation statutes. In Obedian, the bankruptcy court held that, as provided in Valli, the form of title presumption does not trump the community property presumption under Section 760 of the Family Code. The Chapter 7 trustee did not rebut the evidentiary presumption under Cal. Fam. Code § 760 by proving by a preponderance of evidence that the property had been "transmuted" pursuant to the requirements of Cal. Fam. Code § 852. Therefore, the Bankruptcy Court determined that a property held in joint tenancy was community property. At Shulman Hodges & Bastian LLP our bankruptcy lawyers have extensive experience in representing Chapter 7 Trustees and Debtors. Please contact us at www.shbllp.com or call us at 949-340-3400 to speak with one of our lawyers.

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