04 August 2025
As relationships and financial dynamics continue to evolve, modern couples are increasingly entering marriage with significant assets already in place. Among the most valuable of these are investment properties—real estate assets that generate income or hold long-term financial value. Whether it’s a rental home, a commercial property, or a vacation unit, investment properties can become major points of contention during divorce if they aren’t clearly defined in a legal agreement.
In California, where community property laws govern marital finances, a prenuptial agreement is one of the most effective tools for protecting these assets. At Enright Family Law, we help individuals and couples understand how to plan smartly before marriage—especially when complex property or investments are involved. Here’s what you need to know about marital property and prenuptial agreements when it comes to investment properties.
What Is a Prenuptial Agreement?
A prenuptial agreement (or “prenup”) is a legal contract entered into by two people before they marry. It outlines how assets, debts, income, and property will be handled during the marriage and in the event of a divorce. In California, prenuptial agreements are enforceable as long as they meet certain legal requirements and are entered into voluntarily by both parties with full disclosure.
Prenups can define what is considered separate property and what will be considered community property, which is critical when one or both parties own real estate prior to marriage.
Why Investment Properties Require Extra Attention
Unlike personal belongings or checking accounts, investment properties often involve:
- Ongoing income (such as rent or lease payments)
- Property taxes and maintenance costs
- Mortgage obligations
- Capital improvements
- Appreciation over time
These characteristics make them particularly vulnerable to becoming commingled with marital assets. For example, if rent from a pre-marital investment property is deposited into a joint account, or if mortgage payments are made from community income, a court may determine that the property is partially community in nature—even if one spouse owned it before marriage.
Community vs. Separate Property in California
California is a community property state, meaning assets acquired during the marriage are generally shared equally by both spouses. However, separate property includes:
- Property acquired before marriage
- Gifts and inheritances received during the marriage
- Assets protected by a valid prenuptial agreement
Without a prenup, investment properties acquired before marriage can still become community property if:
- The title is changed to include both spouses
- Marital funds are used for upgrades or payments
- Both spouses contribute to managing the property
This can complicate ownership and division during a divorce. A prenuptial agreement allows you to clarify ownership and avoid costly disputes later.
How a Prenuptial Agreement Protects Investment Properties
A well-drafted prenup can clearly establish:
- That the investment property is and will remain the separate property of the original owner
- That any income from the property is also separate
- That any increases in value due to community contributions will be addressed in a specific way (e.g., with a reimbursement formula)
- How expenses and improvements will be paid for and whether that affects ownership
This clarity is especially important for individuals entering marriage with real estate holdings, real estate developers, landlords, or business owners with property-based income.
Real-World Scenarios
Scenario 1: Alex owns a duplex in San Diego before marrying Taylor. After they marry, the rent from the duplex goes into their joint bank account, and they use joint funds to repair the roof. Without a prenup, Taylor may be entitled to a portion of the duplex’s appreciation and income if they divorce.
Scenario 2: Jamie owns a rental condo in Mission Beach before marriage and signs a prenuptial agreement with Morgan. The agreement specifies that the condo and all rental income remain Jamie’s separate property. During the marriage, Jamie keeps the income in a separate account and pays for repairs personally. In the event of divorce, the condo remains Jamie’s separate property with minimal dispute.
These examples highlight how a prenuptial agreement not only protects the property itself but also prevents misunderstandings that can strain a marriage or a divorce settlement.
When to Create a Prenup and What to Include
It’s best to create and sign a prenuptial agreement well in advance of the wedding—ideally several months ahead—to avoid claims of coercion or duress. Both parties should have independent legal counsel, and the agreement must be signed voluntarily after full disclosure of each person’s financial situation.
When the goal is to protect investment property, the prenup should address:
- Property description and ownership
- Title status
- How income and expenses will be managed
- What happens in case of refinance or sale
- Any rights of reimbursement for the non-owning spouse
A generic agreement won’t offer the level of protection needed for real estate assets. That’s why working with a lawyer experienced in both family law and property law is essential.
What If You’re Already Married?
If you didn’t sign a prenup but now realize the need to protect your investment property, it’s not too late. A postnuptial agreement can serve the same purpose if both spouses agree to its terms. However, these agreements are subject to stricter scrutiny in California courts, so they must be drafted with extra care.
How We Can Help
At Enright Family Law, we understand that every modern relationship comes with unique financial circumstances. Whether you’re entering a marriage with significant investment property or planning to acquire assets during the relationship, our experienced team can help you create a prenuptial agreement that protects your interests and avoids future disputes.
We work with real estate professionals, business owners, and individuals with long-term financial goals to create agreements that stand up in court and reflect the realities of modern life. Let us help you approach marriage with peace of mind and a solid legal foundation.
Contact us today to schedule a consultation and protect your investment property before saying “I do.”
