Right to Reimbursement of Separate Property Used for the Purchase of (1) Community Property or (2) the Separate Property of the Other Spouse.

December 23, 2015

 

In the division of the community estate, unless a party has made a written waiver of the right to reimbursement or has signed a writing that has the effect of a waiver, the party must be reimbursed for the party's contributions to the acquisition of the property to the extent the party traces the contributions to a separate property source.

 

The amount reimbursed will be without interest or adjustment for change in monetary values and may not exceed the net value of the property at the time of the division.

 

Contributions to the acquisition of the property include down payments, payments for improvements, and payments that reduce the principal of a loan used to finance the purchase or

 

improvement of the property but do not include payments of interest on the loan or payments made for maintenance, insurance, or taxation of the property. Family Code, section 2640.

 

Rarely is there a written waiver of reimbursement.  However, the party claiming the reimbursement must TRACE the contribution to a separate source.  This means you must present admissible EVIDENCE that the payment came from a separate property source - or get the other party to admit in writing the facts necessary to establish your right to reimbursement.

 

There will not be any interest on the contribution.  The contribution must come from the EXISTING EQUITY in the property, so there must be some equity to get reimbursed.

 

You can receive ONLY credit for payments to PRINCIPAL or which IMPROVED THE FAIR MARKET VALUE OF THE PROPERTY.  SO, if you spent $10,000 for a new pool that increased the value of the property by $1,000, you can get reimbursed for the entire $10,000.  On the other hand, if you paid $10,000 to dig the hole, but never finished the pool, you might not get anything because it did not improve the value of the property.

 

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