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socrateaser
socrateaser, Lawyer
Category: Family Law
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Experience:  Retired (mostly)
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In California Moore/Marsden formula, how is it determined whether

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In California Moore/Marsden formula, how is it determined whether an expenditure is deemed 'improvement' versus 'repair'? I did extensive work during the marriage rebuilding my house for structural and seismic reasons (owned before the marriage, spouse never on title), with essentially no change to the 'look and feel' of the house. I contend this was strictly repairs. My ex says that, because of disclosure laws, the house would not have been worth much without this work, and therefore it was 'improved'.
Submitted: 3 years ago.
Category: Family Law
Expert:  socrateaser replied 3 years ago.

Moore-Marsden is simply a formula used to determine how much of the property is community vis-a-vis separate property. It does not concern itself with what "makes" a particular contribution a repair or an improvement.

 

Rather, it's up to the litigants to prove that their work is an improvement, rather than a repair.

 

An improvement is something that adds value to property, whereas a repair maintains value. This is a fairly flexible but well-worn standard if you're in tax court with the IRS. Not so much in family court, where judges tend to use their discretion to make decisions that defy logical or mathematical analysis.

 

If you get a real property appraiser to testify that the property is worth no more after the repairs than prior thereto, then that would strongly support your argument.

 

However, your facts create an collateral argument, which unfortunately supports your spouse's position, even if the modifications are considered repairs. Fortunately, this is not an argument that will pop into the consciousness of the typical California family law attorney -- but, since it's popped into mine, I will give you the gist of it, so you can be prepared, just in case.

 

It is well established in California case law that when a spouse refinances real property during marriage, and the lender looks to the borrowing power of both spouses to make the loan, that the loan converts that amount of the property into a community asset, because each spouse is liable for the loan incurred during marriage.

 

Under the same theory, your personal effort is always deemed community property. So, if you personally worked on the property, then the value of your effort is one half your spouse's community. Even if there is no improvement to the property, the value of your work may be found to be community property, and thus, the community is entitled to reimbursement for that effort from the value of the property.

 

Once again, this isn't likely to be argued by your opponent -- but it would be if I were representing her interests, so it is not impossible that some other attorney might suddenly have the lightbulb go on.

 

In my view, your spouse's disclosure issue is irrelevant. If she argues that, it can only be good for you, because it will take away from better arguments that could have otherwise been made.

 

One more point. Family law judges are crappy accountants. Left to their own devices, they will muck up any complex valuation. So, try to give the judge an argument that requires no mental effort, where all the calcuations are available and obvious. No sophisticated economics need apply.

 

Hope this helps.

 

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Customer: replied 3 years ago.

I paid for the 'repairs' through a refinance that was a 'no-document' loan, based on equity, in my name alone, and my spouse signed a quitclaim as required by the S&L. I believe this protects me from the allegation that community funds were used. However, I don't understand how an argument can be made that 'repairs', performed by me, are community in nature, and the value of my labor therefore be subject to M/M. If repairs are excluded if done by others and paid for by me, how can they be included if done by me?

The disclosure issue concerns the value of the house in case it were placed on the market for sale, and the resultant decrease in sales price should the substandard structure be revealed, as opposed to the now-relevant situation where the structure is substantial.

Expert:  socrateaser replied 3 years ago.

Because income arising from a spouse's skill and efforts between marriage and separation is community property, the community should receive a fair share of the economic benefit that derives from a spouse's significant devotion of time and effort during that period to the handling of his or her separate property, e.g., businesses, real estate, stocks. In such cases, the court must apportion the total economic benefit between community property and separate property. Beam v Bank of America (1971) 6 C3d 12, 17; Pereira v Pereira (1909) 156 C 1, 7.

 

That's how the case law has been for the past 100 years.

socrateaser, Lawyer
Category: Family Law
Satisfied Customers: 33483
Experience: Retired (mostly)
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