Posted on: 27th Oct, 2006 02:13pm
If you buy property prior to marriage with a down payment from your own funds, but make payments with community funds during marriage, then your spouse will have community interest in the property. Community funds imply your spouse's money and yours as spent towards loan payment. The community interest is known as Moore Marsden interest, which is calculated using a formula known as Moore Marsden Rule.
The Moore Marsden Rule also applies to cases involving separate commercial property and where parties refinance a separate residential mortgage during marriage. However, the Rule is applicable only in case of states where the community property division exists.
The Moore Marsden Rule also applies to cases involving separate commercial property and where parties refinance a separate residential mortgage during marriage. However, the Rule is applicable only in case of states where the community property division exists.
How to calculate Community property interest
Applying Moore Marsden Rule, the community property interest is calculated as:
CP = PPCP + (CP% x MApp)
Where,
CP: Community property interest
PPCP: Payments towards Principal from community property
CP%: Community property percentage = PPCP / Purchase Price
MApp: Appreciation during marriage
SP = DP + PPSP + Pre-MApp + (SP% x MApp)
Where, SP: Separate property
DP: Down payment on property
PPSP: Payments towards Principal from separate property
Pre-MApp: Pre-marriage appreciation
SP%: Separate property percentage = 100% - (PPCP / Purchase Price)
Let's take an example:
Kim purchased a $300,000 house in 1992 prior to her marriage. She made a down payment of $50,000 and borrowed $250,000. Kim paid down $20,000 in principal by 1997 when she married Dick. The fair market value of the house at the time of marriage in 1997 was $400,000.
During their marriage Kim and Dick paid 30,000 towards the principal from community property. When Kim and Dick separated in 2005, the fair market value of their home was $600,000.
Now, applying the formula given by Moore Marsden Rule,
Community property percentage (CP%) = $30,000/$300,000 = 10%
Separate property percentage for Kim = 100% - 10% = 90%
Community property interest = PPCP + (CP% x MApp)
= $30,000 + (10% x $200,000)
= $30,000 + $20,000
= $50,000
Since community interest is divided into half, therefore both Kim and Dick will get = ($50,000/2) = $25,000 each.
Kim's separate property interest = DP + PPSP + Pre-MApp + (SP% x MApp)
= $50,000 + $20,000 + $100,000 + (90% x 200,000)
= $170,000 + $180,000
= $350,000
On separation and divorce, Dick gets: $25,000 as community interest
And, Kim's community and separate property interests = $350,000 + $25,000 = $375,000
Principal balance of loan to be paid off by Kim = $250,000 - ($20,000 + $30,000) = $200,000
So, when a couple divorces in a community property state, the court will award half of community interest to each spouse and 100$ separate property to the spouse who bought the property with separate funds.
CP = PPCP + (CP% x MApp)
Where,
CP: Community property interest
PPCP: Payments towards Principal from community property
CP%: Community property percentage = PPCP / Purchase Price
MApp: Appreciation during marriage
SP = DP + PPSP + Pre-MApp + (SP% x MApp)
Where, SP: Separate property
DP: Down payment on property
PPSP: Payments towards Principal from separate property
Pre-MApp: Pre-marriage appreciation
SP%: Separate property percentage = 100% - (PPCP / Purchase Price)
Let's take an example:
Kim purchased a $300,000 house in 1992 prior to her marriage. She made a down payment of $50,000 and borrowed $250,000. Kim paid down $20,000 in principal by 1997 when she married Dick. The fair market value of the house at the time of marriage in 1997 was $400,000.
During their marriage Kim and Dick paid 30,000 towards the principal from community property. When Kim and Dick separated in 2005, the fair market value of their home was $600,000.
Now, applying the formula given by Moore Marsden Rule,
Community property percentage (CP%) = $30,000/$300,000 = 10%
Separate property percentage for Kim = 100% - 10% = 90%
Community property interest = PPCP + (CP% x MApp)
= $30,000 + (10% x $200,000)
= $30,000 + $20,000
= $50,000
Since community interest is divided into half, therefore both Kim and Dick will get = ($50,000/2) = $25,000 each.
Kim's separate property interest = DP + PPSP + Pre-MApp + (SP% x MApp)
= $50,000 + $20,000 + $100,000 + (90% x 200,000)
= $170,000 + $180,000
= $350,000
On separation and divorce, Dick gets: $25,000 as community interest
And, Kim's community and separate property interests = $350,000 + $25,000 = $375,000
Principal balance of loan to be paid off by Kim = $250,000 - ($20,000 + $30,000) = $200,000
So, when a couple divorces in a community property state, the court will award half of community interest to each spouse and 100$ separate property to the spouse who bought the property with separate funds.
kindly anyone provide some information on how the Moore/Marsden interest is calculated.
Is it true that only the principal paid by with Community Funds will be split but the interest paid on a house loan during marriage with community funds will be the separate property of the spouse who purchased the property before marriage? So in calculation, you need to know what the CP funds went to pay only the principal and those would be the funds that would be split 50/50; right?
Hi lawpros!
Welcome to forums!
Community property laws will vary from one state to another. In such a situation, it will be better if you could contact a real estate attorney and take his opinion regarding this issue.
Feel free to ask if you've further queries.
Sussane
Welcome to forums!
Community property laws will vary from one state to another. In such a situation, it will be better if you could contact a real estate attorney and take his opinion regarding this issue.
Feel free to ask if you've further queries.
Sussane
My mom is getting a divorce in California. She owned a home prior to marriage. Her husband of 17 years tried to kill her. Does the Moore Marsden rule still apply if she was the victim of domestic violence? He will be sentenced to 5 years.
Hi dianesle,
Well, I think the rule may apply. It will be better if you could contact your a real estate attorney and take his opinion in this matter. He will help you in knowing the correct interpretation of the law in this situation.
Thanks
Well, I think the rule may apply. It will be better if you could contact your a real estate attorney and take his opinion in this matter. He will help you in knowing the correct interpretation of the law in this situation.
Thanks
I got married in 1995. My parents gave me a house when they refinance and left me in the deed. My wife signed a deed release. My name only appears in the deed and its states separate property in 2003. In 2008 i refiance and took out equity and i still have it in a CD. I am divorcing now and the wife want half of everything. How much is she entitled?
Hi Josebaut,
You have mentioned that your wife has signed a deed release and now you own it as a separate property. In that case, your wife won't get any share from that property.
You have mentioned that your wife has signed a deed release and now you own it as a separate property. In that case, your wife won't get any share from that property.
The judge told me to find a family law mediator so that he/she can do a moore marden. My wife and i don't have attorneys. When i look for someone to do it, its always an attorney who states that they need to be hired as my attorney but i don't need one except to do the moore marden. where can i find a family law mediator who can do a moore marden in Los Angeles, CA.?
Hi Jose,
You can find some information in this given page: "http://www.osbar.org/public/legalinfo/1218_MediationFamLaw.htm".
Thanks
You can find some information in this given page: "http://www.osbar.org/public/legalinfo/1218_MediationFamLaw.htm".
Thanks
Is there case law allowing reimbursement or setoff to the SP owner?
This is something which needs to be clarified from a real estate attorney.
In California, if I used only my earnings or savings to pay down the principal balance, is it still considered "community funds"?
Subsequent to the separation, if I used the monies from HELOC to pay for housing, property tax and other maintenance expenses, am I responsible for just one-half of those expenses when doing the final calculations of how much each party gets when the house is sold or appraised?
Am I entitled to any credit or reimbursement from the other spouse if that spouse did not pay a single dime towards any mortgage payment, tax or other maintenance expenses both during marriage and after separation?
Thank you and sorry for asking you multiple questions.
Subsequent to the separation, if I used the monies from HELOC to pay for housing, property tax and other maintenance expenses, am I responsible for just one-half of those expenses when doing the final calculations of how much each party gets when the house is sold or appraised?
Am I entitled to any credit or reimbursement from the other spouse if that spouse did not pay a single dime towards any mortgage payment, tax or other maintenance expenses both during marriage and after separation?
Thank you and sorry for asking you multiple questions.
HI Jeremiah,
The earnings and savings that are solely in your name will be considered as your sole income. I don't think it will be a part of the community property. Nevertheless, you should contact a real estate attorney and take his opinion in this regard.
Thanks
The earnings and savings that are solely in your name will be considered as your sole income. I don't think it will be a part of the community property. Nevertheless, you should contact a real estate attorney and take his opinion in this regard.
Thanks
i am getting divorce... my ex bought our main residence prior to our marriage..we got married in 1996, he bought the main residence in 1986 for $69,000. in 1999 he put my name in the deed and we refinance the house. we refinance the house again in 2006 and took $200k out from the house. we paid the first mortgage off. we refinance again in 2010 or 2011 to lower the monthly payments. now the house is worth 1.5 million and the mortgage is about $180,000.. how do you calculate moore marsden rule in our case?
Hi Guest,
Well, a real estate attorney of your state well versed with the Moore Marsden laws will be able to help you in this matter.
Well, a real estate attorney of your state well versed with the Moore Marsden laws will be able to help you in this matter.
What if separate property was quit claimed to a new spouse? My son owned a home that he quit claimed to his wife. Ten years later, they are divorcing. Is this ALL considered Community Property?(In California)