Tuesday, November 12, 2013

Claiming Community Interest in Spouse's Separate Real Property

Attorneys and judges will often refer to the Moore/Marsden formula when determining the community property interest in one spouses' separate real property at the time that assets are divided upon divorce.  Moore/Marsden formula refers to a California Supreme Court case decided in 1980 (In re Marriage of Moore (1980), 28 C3d 366) and a subsequent California Court of Appeals case decided in 1982 (In re Marriage of Marsden (1982), 130 Cal.App.3d 426).

The principal in the calculation is that if the community (i.e., the marital unit) has made payments reducing the principal balance of a mortgage of real property owned by only one spouse, then the community is owed a reimbursement.  The reimbursement is based upon the percentage of principal paid down on the mortgage by the community.  This amount is divided in half between the parties to the divorce.  The spreadsheet below can help estimate the community interest in a separate property house if any community money was used to pay down the principal on a mortgage.  In contested divorces, this calculation is not simple because fair market values need to be determined as of the date of division and, at the very least, the date of marriage.  For these reasons, if you are dealing with a Moore/Marsden calculation, it is best to receive the advice of an attorney.  To learn more about divorce and Moore/Marsden calculations contact the attorneys at Senh Law Associates, (925) 408-8546.

1.   Purchase Price _______
2.   Amount of Down Payment _______
3.   Amount of payments on loan principal made
with separate funds _______
4.   Fair Market value at date of marriage _______
5.   Amount of payments on loan principal made
with community funds ________
6.   Fair market value at time of division _______
7.   Subtract line 1 from line 4 _______
8.   Subtract line 4 from line 6 _______
9.   Divide line 5 by line 1 _______
10. Multiply line 8 by line 9 _______
11. Subtract line 10 from line 8 _______
12. Add lines 2, 3, 7, and 11 _______ = SP Interest
13. Add lines 5 and 10 _______ = CP Interest

*This information is not meant to constitute legal advice.