Dividing the Home in Divorce: Understanding reimbursement for Unequal Contributions to the Down Payment of the Marital Residence. Cal. Family Code 2640

QUESTION: How is equity from a home sale divided in a California divorce if each spouse contributed to the down payment from pre-marriage funds but one spouse contributed more of the down payment from pre-marriage funds?

FACTS: I got married three years ago. Shortly after marrying, we bought a house together. We both contributed to the downpayment but more of the downpayment funds came from me, with most of the net worth I had accumulated prior to the marriage going into the house downpayment. Now we are getting divorced in CA and we have sold the house. Should proceeds from the house sale go equally to both spouses or should I get a larger share of the proceeds since I put in a larger contribution to the down payment?

ANSWER: What is called “pre-marriage funds” in the question is defined as separate property funds in California Family Law Code.  In California, Family Code section 2640 governs reimbursement for separate property contributions to the down payment of a community property residence in a California divorce.  Specifically, it addresses situations where one spouse uses separate property funds to purchase a home, which is then owned as community property.

Section 2640 allows for reimbursement of separate property contributions used for the down payment, principal reduction on a loan, or improvements to the community property residence.

Reimbursement is typically on a dollar-for-dollar basis, meaning the contributing spouse receives the amount they initially contributed from their separate property.

The spouse claiming reimbursement must be able to trace the separate property funds used for the contribution.

The amount of reimbursement does not include interest or appreciation and cannot exceed the net value of the property at the time of division.

APPLICATION TO YOUR SITUATION: Each of you contributed to the down payment with separate property funds. Each of you should receive the amount you contributed to the down payment. And the remainder of the proceeds from the sale should be divided evenly.

 

Attorney Galen Gentry assists clients in Los Angeles and Southern California with all aspects of divorce,  including determining community property and community debt, distinguishing separate property and separate property reimbursement issues.  Mr. Gentry has 30 years of experience and can help people to protect their interests. Call at (310) 282-7521 to schedule a free consultation.