More Than Just Common Sense: the Rules for the Simultaneous Exchange of Deeds and Equalizing Payments

• Jurisdiction: California,United States
• Citation: Vol. 38 No. 1
• Publication year: 2016
• Author: David Youngsmith
• topic: Contracts,Family Law,Civil Procedure,Real Estate

More than Just Common Sense: The Rules for the Simultaneous Exchange of Deeds and Equalizing Payments

David Youngsmith

David Youngsmith is a Certified Family Law Specialist, and a principal of the Hersh Family Law Practice, L.P. Prior to joining the firm in 2006, David had his own family law practice for several years. From 1985 to 2000, he was a member of the editorial staff at LexisNexis Matthew Bender, where he was the Managing Editor responsible for several national and California family law publications, including California Family Law Practice and Procedure, 2nd Edition, the California Family Law Litigation Guide, and the California Family Law Monthly. David was also an Adjunct Professor of Law at Golden Gate University School of Law, where he taught Legal Writing and Research. He currently serves as a family law settlement master in both the Marin County and San Francisco Superior Courts, and is a panelist at the Bar Association of San Francisco's "Annual Family Law Developments and Strategies" seminar.

We have all had many cases in which community real property is awarded to one spouse, subject to an equalizing payment by the other spouse. Typically, the parties simultaneously exchange a deed and a check. We follow that practice so often, and so often without question, that it seems almost axiomatic. Without thinking about it too much, it is just common sense: the deed is security for the payment. Nevertheless, unimpressed by that explanation, a settlement master in one of my recent cases asked me for legal authority supporting a simultaneous exchange. After some investigation, this is what I found:

A. Background

My case involved a global settlement memorialized in two Memoranda of Agreements ("MOAs").¹ The MOAs provided that Husband would pay Wife a lump sum amount in satisfaction of her claims relating to the division of assets, spousal support, and attorneys' fees and costs. Wife's claims included her community property shares of the family residence and a weekend/vacation property, as well as her share of a Moore/Marsden/Bono² (i.e., equitable) interest in Husband's separate property apartment building.

The parties negotiated and executed the first Memorandum of Agreement ("MOA1") at a settlement conference conducted by the settlement master. MOA1 awarded the weekend/vacation property to Husband at an agreed-upon value and confirmed his separate property apartment building to him. It also quantified the amount due to Wife for her equitable interest in the apartment building, as well as Husband's Fam. Code § 2640 reimbursements for his separate property contributions to the family residence and the weekend/vacation property. MOA1 reserved the disposition of the family residence and the amount of the lump sum payment due to be paid to Wife pending ongoing negotiations,³ and the parties set another date to reconvene the settlement conference.

Shortly after the first settlement conference, the parties resolved the remaining issues, resulting in the second Memorandum of Agreement ("MOA2"). MOA2 awarded the family residence to Husband and quantified the lump sum payment due to Wife, taking into account the equitable interest and the reimbursements quantified in MOA1. Per MOA2, Husband was to make the lump sum payment in two installments paid directly to Wife, the first (approximately 20% of the total) within two weeks and the balance within sixty days thereafter. Other than those deadlines, there were no...