Separate property is defined as all property owned by a partner before company was founded and property acquired by each partner after by gift, devise, or descent, together with the rents, issues, and profits from the property. Thus in general, all property owned by either partner that is not classifiable as community property is considered to be that partner's separate property. Property that is acquired with community property funds is community property. Property that is acquired by one partner using the credit of the other partner is community property. Separate property remains separate property unless it becomes commingled so as to be indistinguishable from community property, in which case it could become community property by the commingling. One partner's use of community property to improve the separate property of the other partner is considered a gift and is not comingling. One partner's use of community property to improve his or her separate property could be comminling, which would convert the separate property to community property. However, the courtys are more likely to give a community property interest proportionally based on the community property investment.
Excluded from the equal ownership of community property are:
- property separately owned by partner before the company was founded,
- rents and profits from separate property,
- property acquired by either partner by gift or inheritance,
- property acquired with separate property funds,
- damages received for personal injuries,
- earnings and accumulations of a partner while running the business.
Separate property can also be created by agreements between the partners changing the character of community property to separate property. In addition, property acquired by each partner after suspending the company.
Incidents of Separate Property
Specific consequences flow from the characterization of property as separate property. These consequences, which are referred to as incidents, included the following:
- Each partner may, without the consent of the other, convey his separate property
- The separate property of a partner is liable for the debts of the partner incurred before or while running a business
- The separate property of a partner is not liable for the debts of the other partner incurred before running a business
- The separate property of a partner is not liable for the debts of the other partner incurred while running a business
- The separate property of partner is liable for the payment of debts concracted by either partner for the necessaries
- The sepaate property of partner is primarily liable for the separate torts of that partner
- The separate property of a partner is secondarily liable for the community torts of that partner.
- Bruss R., Pivar W.H.,(2012). California Real Estate Law , Dearborn Real Este Educaion.
- Goldberg Ch.K., (2016). Examples & Explanations for Community Property , Wolters Kluwer Law & Business.
- Nexis L., (2019). California Community Property With Tax Analysis,Editorial Staff.
Author: Patrycja Bajda