Hello,
My husband and I are selling our house, but cannot decide on how to
split the assets (we've agreed to turn the assets we earn on the house
into separate property). My husband bought the house before we were
married, but then put my name on the title as soon as we were married.
I have been making payments against the mortgage for as long as we
have been together.
I think I am entitled to half of the profit we will make on the house,
since my name is on the title--in other words, since the house was
transmuted from separate to community property, I should be entitled
to a full 50% of its net value.
My husband, in contrast, thinks I am entitled to half of what remains
after his initial investment (downpayment + repairs), made before we
were married, is subtracted from the profit from the house's sale. His
reasoning is that putting my name on the title did not entitle me to a
full 50% of the house's value. Instead, I am only entitled to half of
the value that the house gained after we married.
Which one of us is right?

---

Clarification of Question by cawife-ga on 06 Feb 2006 11:24 PST

BTW: We live in California, a community property state.

According to my research, your husband is generally correct.  In
California, the Moore-Marsden formula  is applied to determine your
respective interests in the house.

Especially if he owned the home for a considerable period of time
before you are married, he is entitled to sole possession of the
appreciation that occurred before you were married.  In addition, his
separate funds used on the house, such as his down payment, repairs,
and payments to mortgage principal prior to your marriage are credited
to him to determine his separate property percentage.  Your community
property interest is determined by dividing the amount community funds
went towards principal repayment divided by the home's purchase price.
 You would then be entitled to half of that amount of the
appreciation.  Since the community interest is reduced by the separate
property interest, you would effectively receive less than half of the
appreciation after you were married.

The following sources below will provide you with additional insight
into your situation, including detailed examples of how the formula is
used.

Sincerely,

Wonko

Search terms: California divorce house title

"When a couple divorces in California, the court will divide all of
the community property in half and award 100% of the separate property
to its respective owner. "This means that if you own property prior to
getting married it remains your separate property even after you break
up. However, there are some exceptions to this rule. For instance, if
you commingle your assets you can make an asset community property.
Also, if you make a down payment on a piece of real estate with
separate property funds prior to the marriage, but throughout your
marriage you make mortgage payments from your community wages, your
spouse will have a community interest in that property known as a
Moore-Marsden interest, which is calculated with a formula based upon
the amount of loan principal paid from community funds. However, you
will get your separate property down payment back."

"Adding a spouse's name to the title for a piece of separate real
property (i.e., a deed) will turn the property into a community asset.
However, a right to reimbursement of the separate property investment
will still stand."

"Frequently Asked Questions About Real Estate and Relationships..." By
Georgine Brave (2004) http://www.bravefamlaw.com/faq-realestate.htm

"Property acquired before marriage: If community funds are used to
make payments on property purchased by one of the spouses before
marriage, the community has a community property interest in the
property in the ratio that the payments on the purchase price made
with community funds bear to payments made with separate funds. [Re
Marriage of Moore (1980) 28 Cal 3d 366, 168 Cal Rptr 662, 618 P2d 208]
The four-step formula used to compute the community and separate
interests is as follows:

First, the separate property percentage interest is determined by
crediting the separate property with the down payment and the full
amount of the loan, less the amount by which the community property
payments reduced the principal balance of the loan. This sum is
divided by the purchase price.

Second, the community property percentage interest is determined by
dividing the amount by which community property payments reduced the
principal by the purchase price.

Third, the amount of capital appreciation is determined. The purchase
price of the property is used in determining the respective percentage
interests of the community and separate estates. The capital
appreciation subject to community division is the difference between
fair market value at the time of marriage and the fair market value at
the time of trial.

Finally, the community and separate property percentage is applied to
the amount of appreciation. [Re Marriage of Moore (1980) 28 Cal 3d
366, 168 Cal Rptr 662, 618 P2d 208]"

"The Moore decision was simplified by the fact that the wife had
purchased the property shortly before marriage, and it was found that
there had been no appreciation in value at the date of marriage, nor
had there been a significant reduction in the principal balance owing
on the loan. Further, the parties lived in the residence together
until their date of separation, and all payments from the time of
marriage until the date of separation were made from community
property.

The Marsden decision was made more difficult due to the fact that the
husband had owned the property for 7 years prior to marriage. The
trial court had not given any credit to the husband for the increase
in value from the time of purchase until the time of marriage. The
court of appeal found this to be an error, finding that the premarital
appreciation should be credited to husband?s separate property. [In re
Marriage of Marsden (1982, 1st Dist) 130 Cal App 3d 426, 181 Cal Rptr
910]"

"Re: Moore-Marsden question" (2001)
http://66.102.7.104/search?q=cache:Xz7MwZWs0Z0J:www.jprlawcorp.com/cgibin/divorce/messages/4608.html+%22moore+marsden%22+%22principal+payments&hl=en

Thanks for your help.