WHAT ABOUT SEPARATE PROPERTY DOWNPAYMENTS FOR OUR HOME?
This comes up a lot. Two young people get married. One of them is doing well and has saved, before getting married, the amount of $100,000 to buy a home.
The couple buy a home as a married couple. The $100,000 one party saved prior to marriage is used as the down payment.
Flash forward 20 years. The couple is divorcing. Now what?
California Family Code Section 2640 is where to look:
(a) “Contributions to the acquisition of property,” as used in this section, include downpayments, payments for improvements, and payments that reduce the principal of a loan used to finance the purchase or improvement of the property but do not include payments of interest on the loan or payments made for maintenance, insurance, or taxation of the property.
(b) In the division of the community estate under this division, unless a party has made a written waiver of the right to reimbursement or has signed a writing that has the effect of a waiver, the party shall be reimbursed for the party's contributions to the acquisition of property of the community property estate to the extent the party traces the contributions to a separate property source. The amount reimbursed shall be without interest or adjustment for change in monetary values and may not exceed the net value of the property at the time of the division.
(c) A party shall be reimbursed for the party's separate property contributions to the acquisition of property of the other spouse's separate property estate during the marriage, unless there has been a transmutation in writing pursuant to Chapter 5 (commencing with Section 850) of Part 2 of Division 4, or a written waiver of the right to reimbursement. The amount reimbursed shall be without interest or adjustment for change in monetary values and may not exceed the net value of the property at the time of the division.
The key word here is "tracing". That means the party who paid the downpayment with separate money has the burden (legaleze for "it's your job") of proving the amount and separate nature of the funds. To the extent that can be done they would get the downpayment back, without interest. This assumes sufficient money in the marital estate to do so (". . .may not exceed the net value of the property at the time of division.").
In my example, assuming the entire $100,000 can be traced and shown to have been used for the downpayment, that person would get back $100,000. Simple? No it's not. Especially many years down the road. Was the $100,000 put in a joint account and some used to buy food, clothes, furniture, jetskis, etc.? See my blog about saving old paperwork.
This can be tough and you need a lawyer to help you get what you are entitled to. Call me today at 951.680.9058 for a consultation.
Robert Brownlee, Esq.