It happens all the time. One spouse buys a home before the date of marriage, but during the marriage, community money is used to pay down the mortgage. How does the Court typically deal with these situations? This question was largely resolved in the Supreme Court of California case, In re Marriage of Moore, and the appellate case In re Marriage of Marsden, which to an extent clarified Moore. These cases held that when the community pays down principal, the community is not only entitled to a dollar for dollar reimbursement, but is entitled to a pro tanto share of the appreciation in the property from the date of marriage to the time of trial. This leads us to the infamous Moore/Marsden formula. To determine the community interest in the property: Step 1: The community receives a dollar for dollar reimbursement for pay down of principal. Step 2: In addition to the reimbursement listed in Step 1, the community gets a pro tanto share in the marital appreciation of the home calculated as follows: The appreciation of the home between the date of marriage and the date of trial multiplied by the following fraction: Numerator = Community property payments of principal. Denominator: Purchase price of the home. Step 1 + Step 2 = the community interest in the property. To determine the separate interest (often called the Separatizer’s interest), as opposed to the community interest the home, the formula is as follows: Step 1: The Separatizer gets a dollar for dollar reimbursement of the down payment, all principal payments made from SP at any time, and all premarital appreciation. Step 2: In addition to the amount listed in Step 1, the Separatizer is entitled to the appreciation of the home, calculated as follows: The appreciation of the home between the date of marriage and the date of trial multiplied by the following fraction: Numerator = Separate property payments of principal (including any down payment) + the unpaid mortgage balance Denominator: Purchase price of the home. Click here to view the Moore/Marsden Calculator Let’s try an example. Let’s say H buys a home in 2009 for $400,000. He makes a down payment of $50,000 and pays an additional $100,000 of principal before H and W get married in 2011. On the date of marriage, the price of the home is $500,000. After the parties got married, the community paid down another $100,000 of principal. On the date of trial, the house is valued at $700,000. What are the community and separate property interests in the home? Let’s revisit our formulas. The community interest: Step 1: The community receives a dollar for dollar reimbursement for pay down of principal. ($100,000.) Step 2: In addition to the reimbursements listed in Step 1, the community gets a pro tanto share in the marital appreciation of the home calculated as follows: The appreciation of the home between the date of marriage and the date of trial ($200,000) multiplied by the following fraction: Numerator = Community property payments of principal ($100,000) Denominator: Purchase price of the home. ($400,000) $100,000 +$200,000 x ($100,000/$400,000) = A community interest of $150,000. The separate interest: Step 1: The Separatizer gets a dollar for dollar reimbursement of the down payment ($50,000), all principal payments made from SP at any time ($100,000) and all premarital appreciation ($100,000). Step 2: In addition to the amount listed in Step 1, the Separatizer is entitled to the appreciation of the home, calculated as follows: The appreciation of the home between the date the marriage and the date of trial ($200,000) multiplied by the following fraction: Numerator = Separate property payments of principal (including any down payment) ($150,000 total) + the unpaid mortgage balance. ($150,000) Denominator: Purchase price of the home. ($400,000)
$250,000 +$200,000 x ($300,000/$400,000) = A separate property interest of interest of $400,000. The separate property interest plus the community property interest should always equal the equity in the home. If it does not, then there was a mistake in the calculation. Straight Moore/Marsden calculations are exceedingly rare. If, during the marriage, there was an improvement to the home, a change in title, and/or a refinance, a simple application of the formula won’t help you. If you have questions about the division of a community estate, it is important that you discuss your rights with an experienced family law attorney. At Bickford Blado & Botros, our attorneys have successfully litigated complex property division cases, including Moore/Marsden cases. Don’t settle for less when determining your rights. Call 858-793-8884 in Del Mar, Carmel Valley, North County or San Diego. www.bickfordlaw.com
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