Community Property Final Exam

Spring 2002 - Professor Chang

 

 

INSTRUCTIONS

 

1. This exam is CLOSED BOOK. No papers, outlines, books, dictionaries, note's, calculators or any other materials may be used.

2. This exam consists of two essay questions and 1 bonus question. The total time to complete all three questions is 2 hours and 15 minutes. The suggested time for each essay question is one hour but you may allocate your time as you wish.

3. There are 4 pages to this exam.

4. Your answer should demonstrate your understanding of California community property as applied to the facts presented. Conclusions without explanation or analysis will not receive credit.

5. All facts take place in California unless otherwise stated.

6. Please return all materials at the end of the exam.

7. GOOD LUCK! Have a wonderful summer!

 

 

 

Community Property - Question One- 50 Points - One Hour - Spring 2002

When Harry met Sally, he was already legally married to Wanda, In 1980, Harry and Wanda got married in southern California. Soon after their marriage, Harry's parents transferred their Wyoming ranch to Harry as a wedding gift.

 In 1982, Harry met Sally while jogging in Golden Gate Park. Inspired by their morning runs, Harry began experimenting with a high-energy protein granola bar which he named "Fern Zing".  The bars were so delicious and energizing, Harry borrowed $20,000 as start-up capital for "Fern Zing." Fern Zing bars were an overnight success. In 1983, with Fern Zing bars as their party favors, Harry and Sally got "married" in the park.  During the wedding, Harry announced to the guests that he and Sally would run Fern Zing together.  Harry also announced, "Everything I own now belongs to Sally and vice versa."  After a honeymoon in Costa Rica, Harry returned to work full-time as the CEO of Fern Zing, earning an annual salary of $100,000. Harry continued to visit Wanda in southern California.

 Later that year, Harry and Sally bought a house in Berkeley for $500,000, with Harry contributing $250,000 from Fern Zing profits for the down payment. Title to the house was taken as "Harry and Sally, as husband and wife." Harry told Sally that under California law, if one of them died, the surviving spouse would inherit the entire house. Later that afternoon, Harry executed a quitclaim deed in favor of his mother Martha. Unbeknownst to Harry, Martha recorded the deed.

 In 1990, Sally's book titled, "The Feng Shui of Fern Zing" on successful office arrangements was published and became a best seller. Sally used the $100,000 in royalties to purchase a sailboat in her own name. Harry paid for the insurance premiums on the boat from his Fern Zing business account. In 1992, a dock fire destroyed the boat. Sally used the insurance proceeds to buy Texaco stock. In 1995, Harry moved out of the Berkeley house and purchased a home in Grass Valley for $150,000. Title to the Grass Valley house was taken in Harry's name only.

 In 1997, Harry was struck by lightening while playing golf in a thunderstorm. He was immediately killed.

 
 
 
Community Property - Question Two - 50 Points - One Hour - Spring 2002
In 1974, Howard and Wendy got legally married under the palm trees in Hawaii. In honor of their marriage, Wendy's parents gave them a beachfront Hawaii condo. Title to the condo was taken as, "Wendy, a 75 percent owner and Howard, a 25 percent owner, as tenants in common."

 In 1975, Howard and Wendy purchased a house in Woodside for $500,000, using $100,000 from Wendy's trust fund as a down payment. Title to the house was taken as, "Howard and Wendy, as joint tenants with right of survivorship." When Wendy voiced her dissatisfaction with the equal ownership, Howard told her, "Don't worry. California is a community property state. We each own everything anyway." Later that year, Howard took out an insurance policy naming his mother as the sole beneficiary. Howard paid for the insurance premiums from his salary as the head coach for the San Francisco Warriors.

 When Wendy suspected Howard of having a relationship with Gillian, a "Warrior Girl", she ran her Mercedes over Gillian's foot. Gillian sued Wendy for her broken foot and settled the case for $25,000. Wendy used the insurance proceeds from the crashed Mercedes to buy Texaco stock in her own name. Howard secretly bought Gillian a house in Piedmont. Title to the Piedmont house was taken as, "Howard and Gillian, as joint tenants."

 In 1979, Howard and Wendy re-financed the Woodside house, taking out a new loan for $1 million. They used $500,000 to re-model the Woodside house and the balance to buy a beach house in Santa Barbara. Title to the Santa Barbara house was taken as, "Howard and Wendy, a married couple."

 In 1982, Howard resigned from the Warriors because of pending sexual harassment claims made by various women employed as the "Warrior Girls". Several of the women sued Howard. The lawsuit was settled for $1 million. During the lawsuit, Howard was diagnosed with prostate cancer. In 1985, Wendy filed for dissolution.

 

 

Community Property -- Bonus Question - 5 Points - Ten Minutes- Spring 2002

When can a spouse place a lien on community property without the consent of his/her spouse? Explain your answer.