Dividing the family home is arguably one of most of the most complicated and contentious parts of a California divorce. The matter of division becomes even more difficult when one spouse bought the home while single and had a mortgage that was partly paid off during the marriage.
California family law grants the right for one spouse to be reimbursed for either (or both) of the following:
- Separate property contributed to community (marital) property
- Community property contributed to one spouse’s separate property
To calculate each spouse’s interest in a piece of real estate like the family home, California courts use a formula called Moore Marsden, which is named after two California cases that involved the division of property that one spouse acquired before the marriage.
In summary, the spouse who bought the home receives a pro tanto interest in the equity that accumulated in the home during the marriage. This interest is based on a percentage calculated by taking the amount of the original down payment, adding the original mortgage, and then subtracting the amount that both spouses contributed to paying down the mortgage. The result is then divided by the original purchase price.
Example:
$30,000 (original down payment)
+ $100,000 (original mortgage)
– $20,000 (amount paid down as a couple)
÷ $200,000 (purchase price)
The purchaser’s pro tanto interest is 55%, so the community’s is 45%.
To calculate the purchasing spouse’s actual interest in the home, the following calculation is used. The assumption will be that the home’s current value is $350,000, which is an appreciation of $150,000.
$82,500 (interest in community appreciation: 55% x 150,000)
+$30,000 (original down payment)
+$20,000 (amount paid down as a couple)
+$10,000 (amount of the principal paid down prior to marriage)
+$33,750 (community interest in appreciation (one-half): 45% x $150,000 x .5)
+$10,000 (amount paid down as a couple (one half): $20,000 x .5)
+ $50,000 (premarital appreciation (assuming that the house was worth $250,000 at the time of marriage)
The purchasing spouse’s actual interest is $236,250.
The other spouse’s interest in the marital home is calculated as follows:
$67,500 (interest in community appreciation: 45% x 150,000)
+$20,000 (amount paid down as a couple)
÷ 2 (one-half of community interest)
Their interest in the home is $43,750.
To do a Moore Marsden calculation, the value of the property at the date of marriage and date of division are required, and the former can be difficult to calculate without assistance from a historical appraisals specialist.
As you can see, division of real estate in a California divorce is complicated and highly intricate. For assistance in calculating an accurate and fair division of the family home, please call Ahluwalia Law P.C. today. We have assisted many clients in successfully obtaining their share of the marital home as indicated by the Moore Marsden formula, and will do the same for you.
