The distribution of assets in a divorce is not always straightforward. In the case of In re Marriage of Freeman, the court discussed how to divide the equity in a house when one spouse purchased the house before marriage, but the mortgage was paid down during the marriage using the parties’ earnings.
Rod and Hub were married for more than 15 years. Before they got married, Hub bought a house. During their marriage, they used their joint income to pay off the mortgage. When they decided
to divorce, the case took two years to get to trial.
Hub wanted the house’s value to be based on the date they separated, but the trial court used the value of the house at the time of the trial instead. Hub appealed, but the Fourth Appellate District Court agreed with the trial court.
The court explained that under California Family Code section 2552, property should generally be valued close to the trial date. This rule helps make sure the property’s current worth is fairly
considered. However, if there is a good reason to value an asset closer to the time of separation, a party can ask the court to use a different date.
Usually, if one spouse buys a house before marriage, it is their separate property. But if the mortgage is paid down during the marriage with joint income, the community (both spouses
together) gains an interest in the house. So, even if the house started as separate property, the community might have a claim to part of its value because community money was used.
To figure out exactly how much of the house belongs to the community and how much remains separate property, courts use what is called a Moore/Marsden calculation. This is an important step when dividing property in a divorce.
Key Takeaways
Under California Family Code section 2552, property in a divorce must generally be valued as close as possible to the time of trial. The court may use a different valuation date only if a party
shows a compelling reason to do so, such as a significant change in the property’s value or use after separation.
In a divorce, when a property is part separate and part community (a mixed asset), the percentage of the community’s interest is fixed as of the date of separation. However, the dollar value of that interest is calculated using the property’s value at or near the time of trial. This ensures the division reflects the property’s most current worth while honoring the financial contributions made during the marriage.
When community income is used to pay down the mortgage on a home purchased by one spouse before marriage, the community gains a financial interest in the property. This means that even if the home started as separate property, part of it may be subject to division in a divorce. The court uses a Moore/Marsden calculation to determine how much of the property belongs to the community.
If you are dealing with a similar family law issue and need assistance with a divorce in Orange County, consider Treviño Law. Our office in Laguna Hills, easily accessible from the 405 and 5 freeways, is here to help with your legal needs.
Disclaimer: This article provides general information and does not establish an attorney-client relationship. For specific legal advice, please contact Treviño Law, Inc.