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.
Please help...I've been reading up on the Moore/Marsden subject, but I havent been able to find one that is like mine...
Basically, in 2006, my spouse and I purchased a home for $500,000. To get the downpayment, I sold a house I owned prior to marriage and applied $90,000. My spouse put in $10,000 for the down and $15,000 came from community funds. We are going to sell the house as a result of the divorce, and it was appraised for $900,000.
My question is: How much of the equity ($900,000-$500,000 = $400,000 equity) is my portion via the Moore/Marsden calcs?
Since the majority of the downpayment came from my pre-marital funds, shouldn't I get that same % of the equity? I was told that I would just get my $90,000 back, and that the rest of the equity would be split 50-50...is this true?? It hardly seems fair considering we would not have even been able to purchase the house had I NOT sold my first house to use as the downpayment....
I live in California...If someone can please break it down for me...I'D GREATLY APPRECIATE IT!!!!
Basically, in 2006, my spouse and I purchased a home for $500,000. To get the downpayment, I sold a house I owned prior to marriage and applied $90,000. My spouse put in $10,000 for the down and $15,000 came from community funds. We are going to sell the house as a result of the divorce, and it was appraised for $900,000.
My question is: How much of the equity ($900,000-$500,000 = $400,000 equity) is my portion via the Moore/Marsden calcs?
Since the majority of the downpayment came from my pre-marital funds, shouldn't I get that same % of the equity? I was told that I would just get my $90,000 back, and that the rest of the equity would be split 50-50...is this true?? It hardly seems fair considering we would not have even been able to purchase the house had I NOT sold my first house to use as the downpayment....
I live in California...If someone can please break it down for me...I'D GREATLY APPRECIATE IT!!!!
Hi alpha9beta
As far as I can understand your question, I feel you have been given the correct information. The $90,000 that you gave for the property did not come from the community funds. It is a part of your separate property. You will get that back (as you have mentioned) and the rest of the equity will be divided 50-50 among both of you.
To calculate the community property interest according to Moore Marsden Rule, you need to use the formula given below:
CP = PPCP + (CP% x MApp)
In this formula:
CP - Community property interest
PPCP - Payments towards Principal from community property
CP% - Community property percentage = PPCP / Purchase Price
MApp - Appreciation during marriage
For Separate Property, the interest can be calculated as:
SP = DP + PPSP + Pre-MApp + (SP% x MApp)
In this formula:
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)
Thus, the down payment that you made for the property is considered as your separate property.
Thanks.
As far as I can understand your question, I feel you have been given the correct information. The $90,000 that you gave for the property did not come from the community funds. It is a part of your separate property. You will get that back (as you have mentioned) and the rest of the equity will be divided 50-50 among both of you.
To calculate the community property interest according to Moore Marsden Rule, you need to use the formula given below:
CP = PPCP + (CP% x MApp)
In this formula:
CP - Community property interest
PPCP - Payments towards Principal from community property
CP% - Community property percentage = PPCP / Purchase Price
MApp - Appreciation during marriage
For Separate Property, the interest can be calculated as:
SP = DP + PPSP + Pre-MApp + (SP% x MApp)
In this formula:
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)
Thus, the down payment that you made for the property is considered as your separate property.
Thanks.
PLEASE SOMEONE CHECK THIS!!!!!
I'm still not clear WHERE it shows the equity:
Purchase Price: $500,000
Original Loan Amount: $400,000
Amount Still Owed: $380,000
Principal Paid during marriage: $20,000
DownPayment that was Community Property: $15,000
DownPayment that was Separate Property: $85,000
Appraised value: $900,000
From above:
PPCP = $20,000 + $15,000 = $35,000
CP% = $35,000/$500,000 = 7%
MApp = $900,000 - $500,000 = $400,000
So, CP = $35,000 + (.07* $400,000) = $63,000
This CP is split 50-50, right? so $32,000 each.
For Separate Property, according to formula:
DP = $85,000
PPSP = $0
Pre-MApp = $0
SP% = 100% - ($35,000/$500,000) = 93%
So, SP = $85,000 +0+0+(.93*$400,000) = $457,000
WHERE is the equity part??? Please someone help me...what am I doing wrong??? Bottom line is...he's claiming he gets:
Appraised value of $900,000 - Amount owed still of $380,000 = $520,000
That $520,000 - My sep prop DP of $85,000 = $435,000
This $435,000 /2 = $217,500
IS THIS RIGHT???? It doesnt seem to take any of the MM calculation into account...
THANX IN ADVANCE FOR YOUR HELP!!!!!
I'm still not clear WHERE it shows the equity:
Purchase Price: $500,000
Original Loan Amount: $400,000
Amount Still Owed: $380,000
Principal Paid during marriage: $20,000
DownPayment that was Community Property: $15,000
DownPayment that was Separate Property: $85,000
Appraised value: $900,000
From above:
PPCP = $20,000 + $15,000 = $35,000
CP% = $35,000/$500,000 = 7%
MApp = $900,000 - $500,000 = $400,000
So, CP = $35,000 + (.07* $400,000) = $63,000
This CP is split 50-50, right? so $32,000 each.
For Separate Property, according to formula:
DP = $85,000
PPSP = $0
Pre-MApp = $0
SP% = 100% - ($35,000/$500,000) = 93%
So, SP = $85,000 +0+0+(.93*$400,000) = $457,000
WHERE is the equity part??? Please someone help me...what am I doing wrong??? Bottom line is...he's claiming he gets:
Appraised value of $900,000 - Amount owed still of $380,000 = $520,000
That $520,000 - My sep prop DP of $85,000 = $435,000
This $435,000 /2 = $217,500
IS THIS RIGHT???? It doesnt seem to take any of the MM calculation into account...
THANX IN ADVANCE FOR YOUR HELP!!!!!
Hi alpha9beta,
The equity I suppose will be your interest in the property. In your case, you will be receiving the CP = $32,000 and the separate property Sp = $457, 000. Thus, you will be receiving:
32,000+457,000 = $489,000.
Thanks,
Jerry
The equity I suppose will be your interest in the property. In your case, you will be receiving the CP = $32,000 and the separate property Sp = $457, 000. Thus, you will be receiving:
32,000+457,000 = $489,000.
Thanks,
Jerry
Got married in 1991, got house together in 1995, quit claimed because of bad credit (student loans)and pressure from her family. Filed bankrupcy in 1998, cleared bad credit, now getting divorced (2009),she claims the house is all hers seperate property? Used quitclaim to throw me out of house. is this legal? the quitclaim was a temp fix according to her family. They never put my name on the deed. her mother was only a co-signer. What is the outcome?
Did you sign on the quitclaim deed? Until and unless you have signed, you retain an interest in the property. I don't think the property is all hers because both of you purchased it.
"They never put my name on the deed"
You mean the title to the property didn't have your name on it?
"They never put my name on the deed"
You mean the title to the property didn't have your name on it?
IM HAVING TROUBLE UNDERSTANDING HOW THE EQUITY IS SPLIT AFTER A DIVORCE IS FINAL. THE MOORE MARSDEN RULE APPLIES IN OUR CASE AND I DO UNDERSTAND THAT IM ENTITLED TO ABOUT 9.85 % OF THE COMMUNITY INTEREST. IF THE HOUSE IS SOLD A YEAR AFTER OUR DIVORCE DO I STILL RETAIN AN INTEREST IN THE SALES PROCEEDS?
Yes, you will still retain the interest in sale proceeds of the property though the property sells after a year of your divorce.
Before we were married, in New York State, my wife put most of the $15,000.00 profit from her old house into the new house we bought together. Both of our names are on the deed of the house. We are seperating now. I am moving into an apartment, and she, who makes almost twice the money I do, is buying another house. She has told me that she in entitled to recieve $15,000.00 of the profits from our house, and anything after that we split 50/50. Is this true?
Yes, she will be entitled to get the $15,000.00 as she has put the money that she received from selling her old property. The rest of the sale proceeds will be divided equally between both of you.
My husband and I have been married 13 years. We bought our house 10 years ago. My name is not on the title because I had less than good credit. Does the Moores/Marsden Calulation apply to my situation?
If you are living in a community property state and if the payments for the property has been made with community funds then your will have community interest in the property.
In a consultation, a divorce lawyer told me that M-M. I told him my situation was that my in-laws bought a house for me and their daughter and the grandchildren to live in 10 years into our marriage. They told us multiple times that they bought the house for us but their name was still on the property deed.
During those years, I only paid them twice for "rent" in the first two months and then there was no charge for the "rent/mortgage" because the house was a gift bought for us. This went on for 5 years. I paid for the utilities in my name. I've been told by the father-in-law 6 months ago that the mortgage on the house is fully paid for.
The lawyer says I am entitled to the appreciation value from the time the house was bought: $800,000 in 2004. It is now worth maybe $1.4 million. Is he correct when he sites the M-M Rule that I am a half owner of the $600,000 appreciation even though almost none of the money to pay for the house came from me. Should I divorce my wife, the lawyer believes that it being a gift and our years of living in it rent and mortgage free proves that it's community property under the M-M Rule.
By the way, we live in California. Is this lawyer right? Please let me know.
During those years, I only paid them twice for "rent" in the first two months and then there was no charge for the "rent/mortgage" because the house was a gift bought for us. This went on for 5 years. I paid for the utilities in my name. I've been told by the father-in-law 6 months ago that the mortgage on the house is fully paid for.
The lawyer says I am entitled to the appreciation value from the time the house was bought: $800,000 in 2004. It is now worth maybe $1.4 million. Is he correct when he sites the M-M Rule that I am a half owner of the $600,000 appreciation even though almost none of the money to pay for the house came from me. Should I divorce my wife, the lawyer believes that it being a gift and our years of living in it rent and mortgage free proves that it's community property under the M-M Rule.
By the way, we live in California. Is this lawyer right? Please let me know.
am i still eligible if all the assets are in my husbands name, even after we've been married 9 years?
As your name is not on the property deed, you will not be eligible to claim the Moore Marsden interest. However, I would suggest you to contact an attorney and discuss the case with him. He will be the best person to help you out.