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.
Welcome Guest,
If your son has transferred the property to a new spouse, then I don't think it will be considered as a part of the community property. Nevertheless, your son should contact an attorney and check out his opinion in this regard.
If your son has transferred the property to a new spouse, then I don't think it will be considered as a part of the community property. Nevertheless, your son should contact an attorney and check out his opinion in this regard.
The a couple was married after the husband put money down in the first two years, had an 18 year marriage, wife did not work or contribute any monitary value but ran the household, is this calculated in?
That rule is definitely news to me. In Florida (and I thought everywhere else), when you get divorced, unless there's a pre-nup, usually the assets are split in half. Think I like the sound of the Moore Marsden rule - you get out of it what you put in - but what about the case of stay at home mothers that don't work? Still a bit confused...
How does one get the fair market value of a personal residence that was owned before marriage, date of marriage, and date of seperation? Can you get it without the use of a real estate person??
Oh, and in one of your answers to someone else's Q, you stated that when the spouse also makes contributions towards the payment of the mortgage once they are married, thus making the other spouse eligible for a share of the interest in the property......but the other spouse DIDN'T make any contributations to the mortage payments once married....can that mean that the spouse doesn't get a share of the interest in the property?? I can prove that I made all the payments to my personal residence during the marriage....please help. Thank you.
Oh, and in one of your answers to someone else's Q, you stated that when the spouse also makes contributions towards the payment of the mortgage once they are married, thus making the other spouse eligible for a share of the interest in the property......but the other spouse DIDN'T make any contributations to the mortage payments once married....can that mean that the spouse doesn't get a share of the interest in the property?? I can prove that I made all the payments to my personal residence during the marriage....please help. Thank you.
Hi Toni!
Welcome to the forums!
You can contact an appraiser and he may help you in this regard. If there has been no contributions from the end of the spouse, they he/she may not be liable to claim share of that property.
Feel free to ask if you've further queries.
Sussane
Welcome to the forums!
You can contact an appraiser and he may help you in this regard. If there has been no contributions from the end of the spouse, they he/she may not be liable to claim share of that property.
Feel free to ask if you've further queries.
Sussane
does the moore/marsden rule apply if the mortgage was refinanced and the wife was added to the title and mortgage. the house was purchased 2 years prior to the marriage and the refinance was about 2 years after the marriage. the original purchase price was 275000 with 10% down and the refinance was for 350000. the house was sold for 515000 with a final payoff of 320000. how can i apply the moore/marsden rule with all the changes that had been made during the marriage?
Hi Tango!
Welcome to the forums!
As far as I know, the Moore Marsden rule can apply in case of refinance as well. Speak to an attorney and he will further help you in this regard.
Feel free to ask if you've further queries.
Sussane
Welcome to the forums!
As far as I know, the Moore Marsden rule can apply in case of refinance as well. Speak to an attorney and he will further help you in this regard.
Feel free to ask if you've further queries.
Sussane
I live in Washington State, my husband had 16 rental properties before marriage, I have worked in them cleaning and fixed things to get the units ready to rent. the mortgage was paid out of an account that had both our names on but the money came from the rental property by rents. We did deposit money into our account that was not our rental account to live off of. Do I have any form of equity asset to these properties, my name was never on the deed?
I failed to mention we have been married for over 13 years.
Hi Janice,
Unless your names are mentioned on the property deed, it will be difficult for you to claim any rights to the equity assets to these properties. Nevertheless, it will be better if you could contact an attorney and take his opinion in this matter.
Thanks
Unless your names are mentioned on the property deed, it will be difficult for you to claim any rights to the equity assets to these properties. Nevertheless, it will be better if you could contact an attorney and take his opinion in this matter.
Thanks
Hello - My husband and I are divorcing. He owned our house before we were married but took out a second mortgage on it just shortly before we got married. So the loan and the payments were then higher than they were when he first bought the house. Once we got married, we paid all of the mortgage payments out of our joint checking account, so with community property funds. We also made several improvements to the house. he is going to claim in court that because the house was worth more fair market value before we got married than when we separated, that there are no community property funds and I am not entitled to any share in anything. how does this affect Moore Marsden? not only did I pay on his second mortgage but it was all community property funds - is he correct in what he is saying?
Hi jenn,
It will be better if you could contact an attorney well versed with the Moore Marsden laws of your state. He or she will be able to assist you better and will let you know what is right.
Thanks
It will be better if you could contact an attorney well versed with the Moore Marsden laws of your state. He or she will be able to assist you better and will let you know what is right.
Thanks
How does it work when wife bought a home prior to marriage with her father. Then got married and lived in the home with her husband. A few years later her elderly father was taken off title and husband put on. What are both parties entitled to in divorce?
Also, another house was purchased by the couple and sold with the loan rolled into the home the wife purchased. How do you figure that out?
Also, another house was purchased by the couple and sold with the loan rolled into the home the wife purchased. How do you figure that out?
If I received $10000 separate property in 1959, how do I calculate what it is worth now?
Thank you
Thank you