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.
Hi mk,
As the payments were made from the community funds, your spouse may have claims to that property. It will be better if you could contact an attorney well versed with the community property laws and he will guide you better in this matter.
Thanks
As the payments were made from the community funds, your spouse may have claims to that property. It will be better if you could contact an attorney well versed with the community property laws and he will guide you better in this matter.
Thanks
Will the M-M Rule apply to a home owned separately by the man prior to and during marriage, but mortgaged during marriage to pay off his wife's business debt? The husband was the sole income provider to the community banking account. His spouse made monthly pmt's toward the loan from her private business income (kept separate from the community bank account) but stopped when she filed for divorce. Ex-wife is now claiming the M-M Rule applies. Your comment?
Hi AndrewH!
Welcome to forums!
If the husband was the sole income provider to the community banking account, and as the home was separately owned by the husband, then Moore Marsden rule may not apply in this case. However, it will be better if you could contact an attorney and take his opinion in this matter.
Feel free to ask if you've further queries.
Sussane
Welcome to forums!
If the husband was the sole income provider to the community banking account, and as the home was separately owned by the husband, then Moore Marsden rule may not apply in this case. However, it will be better if you could contact an attorney and take his opinion in this matter.
Feel free to ask if you've further queries.
Sussane
Hello:
I would like to ask a question regarding fair market value. Should the fair market value of the home be determined for the " date of filing of divorce" or some time later during the " on going court proceedings". Here in Southern CA a year or two can mean significant differences.
Also, is there there a published list of what constitutes home improvement versus home maintenance. For example replacing a rotting fence I consider to be maintenance yet replacing the old patio slider with a nice wood made slider is an improvement.
Thank you
Mr. in Carlsbad
I would like to ask a question regarding fair market value. Should the fair market value of the home be determined for the " date of filing of divorce" or some time later during the " on going court proceedings". Here in Southern CA a year or two can mean significant differences.
Also, is there there a published list of what constitutes home improvement versus home maintenance. For example replacing a rotting fence I consider to be maintenance yet replacing the old patio slider with a nice wood made slider is an improvement.
Thank you
Mr. in Carlsbad
Hi Guest!
Welcome to forums!
As far as the fair market value is concerned, it's better to contact an attorney and take his opinion in this regard. I don't think there is a published list which states what constitutes home improvement and home maintenance.
Feel free to ask if you've further queries.
Sussane
Welcome to forums!
As far as the fair market value is concerned, it's better to contact an attorney and take his opinion in this regard. I don't think there is a published list which states what constitutes home improvement and home maintenance.
Feel free to ask if you've further queries.
Sussane
If I were married in 2001 filed for dissolution in 2007. And the trial date is four years later,are the calculations at time of filing the dissolution or the time of the trial..
Welcome Guest,
Your query has been replied to in the given page:
http://www.mortgagefit.com/predeal/about52305.html
Please take a look at it. I hope it will help you.
Your query has been replied to in the given page:
http://www.mortgagefit.com/predeal/about52305.html
Please take a look at it. I hope it will help you.
Hi, My wife file for divorce and want what the house was worth in 2002. She bought it in 97' for 450k with 90k down. We were married that same yr. 97'.after living together 3 yrs. We owe 286k . I was put on title 2002 we so my be a factor in refinancing which we did a few mo0nths after I was put on She wants what the first 560k and then if it sells for more we split that minus the realty fees etc.The refinance was for 337k only 11k
toward pricinple had been pain even though most of the bills at the time were paid by me.Since then I have contributed at least half of the mortgage payments ($1800) total and $560 a month for taxes I split as well. Can you tell me what I'm entitle to .According to her I would get nothing if the house sold for about 600k.
Your immediate feedback will be greatly appreciated, since my court appearance is this pm.
Kind regards,
Michael
[Email address deleted as per forum rules. Thanks.]
toward pricinple had been pain even though most of the bills at the time were paid by me.Since then I have contributed at least half of the mortgage payments ($1800) total and $560 a month for taxes I split as well. Can you tell me what I'm entitle to .According to her I would get nothing if the house sold for about 600k.
Your immediate feedback will be greatly appreciated, since my court appearance is this pm.
Kind regards,
Michael
[Email address deleted as per forum rules. Thanks.]
As you've paid toward the mortgage, I think you'll be entitled to a share of money if the property is sold off. I will suggest you to contact an attorney well versed with the Moore Marsden law and check out your options.
how does a interspousal tital transfer effect the moore/marsden law in california
Welcome babes,
If you sign an inter-spousal transfer deed and transfer the property to your spouse, then the spouse will become the sole owner of the property. You won't be able to claim any ownership in that property though there is Moore Marsden law in California.
If you sign an inter-spousal transfer deed and transfer the property to your spouse, then the spouse will become the sole owner of the property. You won't be able to claim any ownership in that property though there is Moore Marsden law in California.
any experience with a refinance? wife owned the house before the marriage. the home was refinanced 4 months into the marriage and husband was put on title as joint tenant. home was refinance again approximately 3.5 years later and husband was again put on title as joint tenant. second refinance was an interest only loan. all payments on both loans were made out of community property assets. no discussion or agreement on separate property interest at the time of the refinancings. does moore marsden apply or as any separate property interest been comingled?
Hi anonymous,
As the mortgage payments have been made through community funds, I don't think anyone of the co-owners will have any separate rights. It will be considered as a community property and both the owners will get equal share from the property when it is sold off.
Thanks
As the mortgage payments have been made through community funds, I don't think anyone of the co-owners will have any separate rights. It will be considered as a community property and both the owners will get equal share from the property when it is sold off.
Thanks
My deceased husband and I bought the property, raising our 4 children there. He passed and years later I remarried. At the time of the new marriage (1996) the loan bal was $275,000. Sep 2000, I put my new husband on the title so that we could qualify for a refinance ( this is where I goofed). Value of the prop at the time of adding him was $575,000 and by 2001 the loan went through. Since this prop was from my ex husband adn for me and my kids, and there were NO principal reductions or marital funds used for remodeling. Is the Moore Marsden Calculation appropriate for me to use? If still reading; new husband was added when value was $575k,since the values dropped to under $500k and mtg bal $422K. We are divorcing. What calculation do I use and do I really have exposure here?
Hi Lisa!
Welcome to forums!
If you're staying in a community property state, then Moore Marsden rule will come into play when you're divorcing. As far as the calculations are concerned, you will have to contact a divorce attorney who is expert in this law and take his help in this matter.
Feel free to ask if you've further queries.
Sussane
Welcome to forums!
If you're staying in a community property state, then Moore Marsden rule will come into play when you're divorcing. As far as the calculations are concerned, you will have to contact a divorce attorney who is expert in this law and take his help in this matter.
Feel free to ask if you've further queries.
Sussane