Monday, November 11, 2013

Getting Your Separate Money Back From Real Property Upon Divorce: Family Code Section 2640

Family Code Section 2640 provides that separate property contributions used to acquire property during marriage is reimbursable to that party upon divorce.  There is no increase for interest or adjustment for change in monetary values.  Further, the equity must be present in the property at the time of the divorce to cover the separate property contribution.

For example, John uses $100,000 that he had earned before marriage (his separate property) as a downpayment for a house that he purchased with his wife Jane.  Several years later, the couple decides to divorce and at that time, the house has equity of $200,000.  John would then receive his $100,000 back as his separate property contribution to the acquisition of real property, pursuant to Family Code section 2640.  There is no increase in John's $100,000 down payment investment for interest or inflation.  Note that John would also receive an additional $50,000 for his one-half community property interest.

However, assume that at the time of divorce the house only has $50,000 in equity.  Then John would only receive $50,000 because his right to reimbursement of his separate property contribution may not exceed the net value of the property at the time is divided.

*This information does not constitute legal advice.  For more information on divorce and reimbursements, contact Senh Law Associates at (925) 408-8546.

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