The easiest way to divide assets in a divorce is to split them in half. Wife gets half the money in the bank and Husband gets the other half. Wife gets her car and Husband gets his. When it comes to the house, things can get a little complex. Obviously, a house cannot be split in half like a bank account. The options are to sell the house or for one spouse to “buy out” the other spouse’s interest in the house. But who gets what share of the sales proceeds? What is a fair buyout offer?
The answers to these questions require a sound knowledge of the law in California pertaining to the division of community property. This article will address the division of a house in a divorce when that house is not considered to be 100% community with the equity in the house belonging to each spouse equally.
The two scenarios that we often see which make the division of a house a bit more complex are as follows:
- One of the spouses owned the house to be divided coming into the marriage; or
- One or both of the spouses used their own separate property to pay down the mortgage or as a down payment on the house to be divided.
What if I owned the house prior to marriage?
Moore/ Marsden Apportionment determines Community Interest in a Separate Asset
When one spouse owns a house prior to marriage and that house remains throughout the marriage and into the divorce, the marital community earns an equitable interest in that house if money earned by either spouse during the marriage is used to pay down the mortgage on the house. This is known by divorce lawyers as Moore/Marsden apportionment named after landmark California divorce cases. In cases like this, a percentage of equity is determined with the marital community benefiting from an increase in the value of the property over the curse of the marriage.
What if I used my money for the down payment?
Family Code Section 2640 Reimbursement determines Separate Interest in a Community Asset
When one spouse uses their own separate property to pay down the mortgage or as a down payment on a co-owned house to be divided, that spouse gets a dollar for dollar reimbursement equal to the amount of separate property contributed to the pay down of the mortgage or down payment on the house. That dollar for dollar reimbursement comes off of the top if the sales proceeds from the sale of the house. The remaining equity is divided equally—which includes the increase in value from purchase to sale.
The biggest difference between a Moore/ Marsden and a Family Code Section 2640 apportionment is that in a Moore/ Marsden apportionment, the community actually earns a percentage of the increase in value of the property—with a 2640 reimbursement the separate property contribution does not increase the ownership percentage as it relates to the division of capital gain on the property.
Obviously these issues can become more complex as the number of variables and transactions increase–especially in long term marriages. If you are considering divorce and have questions related to complex property division call one of the experienced San Diego Family Law attorneys at Griffith, Young & Lass for a free consultation today.