The parties married in Bulgaria in 1995. During the marriage, the parties purchased a condominium in Arizona and two other real estate properties in Bulgaria. Husband purchased the condominium while Wife was in Bulgaria and instructed her to transfer funds from a Bulgarian bank account to a Wells Fargo account to complete the transaction. He also sent Wife a disclaimer deed and told her that she needed to sign, notarize, and return the deed quickly or the parties would lose “a lot of money.”
Wife filed for divorce in 2017 and the parties reached partial settlement concerning the properties in Bulgaria. After the family court held a trial to resolve ownership of the Arizona condominium, it found the property to be community property based on what it described as Husband’s fraudulent representation of the disclaimer deed and Wife’s misunderstanding of what it meant.
The decree ordered the property to be sold and the proceeds to be equally divided. Husband filed a motion for a new trial where he argued that the family court applied an incorrect standard when it determined the enforceability of the disclaimer deed. When the family court denied Husband’s motion, he filed this appeal.
Enforceability of Disclaimer Deeds
Under Arizona law, property acquired during marriage by either spouse is presumed to be community property. This presumption is rebutted by a valid disclaimer deed. A disclaimer deed essentially waives the signing spouse’s community interest. Absent fraud or mistake, family courts must enforce disclaimer deeds. Fraud or mistake must be proved by “clear and convincing evidence” — a heightened burden of proof.
In its decree, the family court found that Wife “rebutted the presumption that the [condominium] is sole and separate.” However, the disclaimer deed created no presumption. It instead rebutted the presumption that property acquired during the marriage is community property.
While the decree alluded to both fraud and mistake, the Court of Appeals found no indication that either of these defenses were considered under the heightened standard of clear and convincing evidence, so it vacated the community property determination and instructed the family court to make additional findings based on the existing record or to hold another evidentiary hearing, if necessary.