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Ask Legalease Your Own Question
Legalease
Legalease, Lawyer
Category: Family Law
Satisfied Customers: 16289
Experience:  13 years experience, divorce & custody issues, protective orders, child abuse issues
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I bought my home before marriage for $550,000 and financed

Customer Question

I bought my home before marriage for $550,000 and financed $400,000 (1992) then I deeded the property to my then wife as joint tenancy with me in 1994 after we were married. In 1994 I had about $150,000 of separate property interest in our home. 1996 I rebuild the home with $450,000 of my separate funds. 1999 we refinanced for $600,000. Then again in 2002 for 780,000 and had a 2002 appraisal for $1,300,000. Unfortunately I deeded to my wife our home as her sole and separate property for refinance purposes 2002 intending to record a joint tenancy deed, but we never did. Home sold by court order for $1,900,000 in 2014. At that time the balance of the mortgage to be paid off was $620,000 and after other costs of sale netted about $1,120,000. We also have about $500,000 in community debt to pay. As we are still working out a settlement I have two related questions:
How would the $500,000 in community debt be paid and is there any case law where deeded separate property interest recognized a spouse’s community interest beyond principle loan pay down?
My laymen interpretation of how the home proceeds of $1,120,000 might be divided. Without calculating mortgage principle pay down I believe first I am to receive my $600,000 in separate funds contributions. Seconded there would be community interest of the appreciation between 19994 to 2002, from $550,000 to $1,300,000 of $750,000. Lastly the appreciation while in my wife name as separate property (2002 to 2014) from $1,300,000 to 1,900,000 of $600,000 or net $440,000 after closing costs.
Here is my dilemma; where doses the $620,000 loan pay off and the community debt of $500,000 get calculated from the $1,120,000 proceeds? And again is there any benefit or argument that the appreciation during the property titled solely in my wife’s name is ***** ***** gain in that I made all the mortgage payments and repairs?
Colin
Submitted: 1 year ago.
Category: Family Law
Expert:  Legalease replied 1 year ago.

Hello there --

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Unfortunately, in a community property state like CA, the only true way to keep property out of the marital assets pile in a divorce is to either (A) have a prenuptial agreement, or (b) purchase the property before marriage and never co mingle any funds or the property with your spouse. In your case, once you deeded the property to your wife upon marriage, you made it part of the community property. The fact that you then later deeded it solely to her for finance purposes (which I assume you can prove) makes no difference in the community property assessment by the court -- you were still both living there and using it and still expending marital funds to maintain it and pay the mortgage.

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Unfortunately, what that means is that once the mortgages are paid off, the remaining equity will be split evenly between the spouses by the family court in most cases. So, your community debt would be paid off and then each of you will be entitled to one half of the remaining amount after all debts have been paid.

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MARY