SO OUR HOUSE IS COMMUNITY PROPERTY RIGHT?

Many people know that California is a community property state.  So that means each spouse owns one-half of everything right?  Not exactly.

Community property is actually far more nuanced, but the gist of it is that earnings accrued and property acquired during marriage are considered community property.  Sounds easy enough, but unfortunately, it is not so straight-forward.

For example, if a piece of property were acquired with a party’s separate property (e.g. funds brought into the marriage and clearly identified and traced), then that property is still separate property unless it is somehow transferred into community property.  But it gets even more complex.  If, during the marriage, the parties acquire a piece of property with a down payment from separate property, and finance the balance of the price during the marriage, then the property may be considered community property with a claim for a separate property reimbursement (California Family Code Section 2640).  The catch is the separate property does not earn interest and is not allocated a proportional amount of the increased value of the property.

To make matters even more confusing, if one party brought separate property real property into the marriage, and the community began paying on the mortgage, then the community would obtain a Moore-Marsden interest in the real property, which WOULD allocate a proportional amount of the increased value of the property both to the separate property and the community contributions.  But alas, there is another catch.  The community only obtains a proportional interest in the increased value as to the principal that is paid down on the loan, not to the overall payments to the mortgage.  Therefore, if it was an interest-only loan, the community may in fact accrue no interest whatsoever in the real property despite making years and years worth of payments on the mortgage, property tax, upkeep, and HOA dues.

There are so many variations that may make a piece of property separate property, community property, or some other combination thereof, that it is nearly impossible to definitively state that anything is characterized as either without a thorough analysis of the facts behind the acquisition and maintenance of the property.  Your best bet is to gather all your documentation (purchase documents, title, bank statements, canceled checks, mortgage statements, etc.) and talk to an experienced Family Law attorney to ascertain your interests and rights in any piece of property.

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