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.
How does it work when wife bought a home prior to marriage with her father. Then got married and lived in the home with her husband. A few years later her elderly father was taken off title and husband put on. What are both parties entitled to in divorce?
Also, another house was purchased by the couple and sold with the loan rolled into the home the wife purchased. How do you figure that out?
My sister's ex made no payments on the mortgage during the time they were married, but because the home is community property the judge basically gave him a half interest. She would like to include his half of the mortgage payments (which he didn't pay) as a reimbursement to her. Is this logical under the Moore/Marsden concept?
When the nonpaying partner dies, is his/her half of mortgage burden paid on his/her behalf considered a debit on his/her estate? It was paid by one for 20 years.
Hi Harry,
In this situation,
The payments towards principal from the community property (PPCP) = $80,000
Community property percentage = PPCP/ Purchase price = 80,000/ $300,000 = 0.26%
Appreciation during marriage = $(600,000-300,000) = $300,000
The community property interest
= PPCA + (CP% of MApp)
= $80,000 + (0.26% of 300,000)
= $80, 780
This is an approximate valuation of the community property interest. Since your wife also paid some amount of money towards the mortgage principal from her separate funds, the actual value of the community property interest can differ from the approximate value. The calculation involves certain intricacies and varies from one situation to another.
Thanks,
Jerry
Hi James,
As far as I can understand, the property value of $200,000 will be taken into consideration while calculating community property rights. As Adonis has suggested in his above post, it's better to take help of an attorney regarding laws of your state and then take a decision in this matter.
Thanks
if property purchased prior to marriage is sold by purchaser, those funds are put into joint acct when marriage takes place, then property is purchased during the marriage. upon divorce, how would moore/marsden apply?
Hi anony,
It is indeed a complicated situation. If the property depreciated in value after it was considered as a community property, the MApp or the appreciation during marriage will be zero. But the mortgage on the property was paid from community funds. The money that was spent from the community funds should be taken into account while the community interest is calculated. However, I am not sure how your ex used the community funds to pay off mortgage on a property that was considered as his separate property, unless you authorized him to do so. I think you should consult an attorney as he/she is the best person to guide you regarding how exactly you can calculate your share of the community property interest.
Hi Guest,
You should contact a real estate attorney who is well versed with the community estate laws of your state and he will help you in calculating this.
Why is it that in the description of the Marsden divorce case, the loan balance is subtracted from the FMV whether it is at the point of marriage or at the point of divorce and now the Moore/Marsden formula omits any loan balance from the formula?
Hi Guest,
The loan cannot become a community property. The house will definitely become a part of the community property if the mortgage is paid off from the community funds.
Thanks
If I received $10000 separate property in 1959, how do I calculate what it is worth now?
Thank you
Dear Jessica,
I am writing this on behalf of a good friend who wanted to know the answers to the following two questions:
1. If the ex spouse had down work on the property, such as roofing and plumbing, is that subtracted from the CP?
2. If a property has depreciated since the time of marriage, how do factor the depreciation?
thank you for you time and consideration
hi jessica
i am writing to you on behalf of my friend.
we have two questions.
1. If work is done on a property, is it subtracted from the CP?
2. What is negative depreciated property? Negative in value and how do you factor that out?
thank you
2.
Hi bf,
As far as I know, you'll be able to subtract the work done on the property from the community property interest. Negative depreciation or depreciation means the decline in the value of the assets. You can appraise the property and check out the appraised value of the property. This will help you in knowing whether or not the property has depreciated in value.
To Linda,
As you're the heir to the property, you will be able to file an affidavit of heirship at the county recorder's office and get the property transferred in your name. Then, you can [url=http://www.mortgagefit.com/refinance.html]refinance[/url] the mortgage and pay off the loan.
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 nena,
As the condo was bought before your marriage and the mortgage payments have been made from your husband's checking account, I don't think you would be able to claim community property interest in the said property.
Thanks
I live in Arkansa and my husband restuctured a mortgage on his land and had made one payment before we were married. I paid half of all the rest of the mortgage with my husband. He died intestate in 2008. How does this affect my inheritance as his widow?
Hi,
My soon to be ex wife and I purchased land together while married in CA. She contributed 90% of the down payment from separate property (but to complicate the matter, the proceeds of the supposed separate property were distributed to both our names and to my SSN as part of a 1031 exchange so that may transmute the SP to CP right there, anyone know?). We then paid the land-only loan off completely with a new loan for a home we built on the property. The intent was certainly for the home to be community property, but now in divorce the is trying to get 100% of her DP out of the home. I claim that the home was purchased solely from a community property loan but she is trying to claim that the land purchase is separate. The title is now for the home and the land not the land and home separately. I believe it is 100% community property, does anyone know if that is the case in CA? Thanks
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
Normally, it becomes the responsibility of the surviving partner to pay off the mortgage in full.
how does a interspousal tital transfer effect the moore/marsden law in california
How does one get the fair market value of a personal residence that was owned before marriage, date of marriage, and date of seperation? Can you get it without the use of a real estate person??
Oh, and in one of your answers to someone else's Q, you stated that when the spouse also makes contributions towards the payment of the mortgage once they are married, thus making the other spouse eligible for a share of the interest in the property......but the other spouse DIDN'T make any contributations to the mortage payments once married....can that mean that the spouse doesn't get a share of the interest in the property?? I can prove that I made all the payments to my personal residence during the marriage....please help. Thank you.
Hi Tango!
Welcome to the forums!
As far as I know, the Moore Marsden rule can apply in case of refinance as well. Speak to an attorney and he will further help you in this regard.
Feel free to ask if you've further queries.
Sussane
Hi Wally,
Your ex-wife purchased the separate property and made the mortgage payments from her own funds. No portion of the community funds was used to either acquire the property or pay the mortgage on it, right? In that case, I think the property will be considered as a separate property even though the proceeds from the sale of this property were distributed among both you and her.
The new home built on the land that you purchased along with her is a community property. The land was purchased separately and the loan against it was paid off separately. It is true that the current mortgage has both the land and the title as collateral, but they were purchased separately. The fact that your ex-wife made 90% of the down payment when the land was bought will be taken into consideration when the community property ownership will be determined. However, I suggest you to contact a divorce attorney in this regard as he is the best person to advice you in this situation.
Does the Moore/Marsden rule apply if the mortgage was refinanced and the wife was added to the title and mortgage. The house was purchased 2 years prior to the marriage and the [url=http://www.mortgagefit.com/refinance.html]refinance[/url] was about 2 years after the marriage. The original purchase price was 275000 with 10% down and the refinance was for 350000. The house was sold for 515000 with a final payoff of 320000. How can I apply the Moore/Marsden rule with all the changes that had been made during the marriage?
Hi Guest,
Your ex will be able to claim a portion of the equity in the property depending upon the amount she or he invested in the property. You should contact your divorce attorney and he will help you in calculating the amount you need to pay to your ex.
Thanks
To anon,
If the home equity line of credit is in your name, you are responsible for it. You will have to pay it off. Otherwise, your credit will be affected. If your community interest in the property is $40k, you can use the money to repay the debt.
To anony,
[quote:fc0a77898f]….how is that rationalized as being fair when community assets are used to pay off debt on a separate party investment.[/quote:fc0a77898f]
If the property depreciates in value, the MApp or appreciation during marriage can be negative in value. But why would the community assets be used to pay off debt on the third party investment? If the debt is not a liability of the community property, its assets should not be used to repay the third party investment debt.
My spouse came into our marriage in 1988 with a house she had purchased in about 1974. From 1988 until the mortgage was completely paid off in 2004 (and thereafter), she handled all the household bookkeeping. Each month she would present me with an itemized bill for my half of household expenses (mortgage, insurance, utilities, cable, cleaning lady, etc.). One of those line items was, every month for 16 years, my half of the mortgage payment. I always wrote a check to her from my own separate checking account to cover my half of our monthly household bills. We are now divorcing. Does the fact that I paid out of my own account (rather than a joint account being used), and always wrote the check payable to her, negatively impact any equity interest that might otherwise accrue to me under Moore-Marsden?
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.
My husband bought a condo worth $200,000 before getting married. Now I want to divorce and would like to know if his mortgage payments are part of the community property. He uses his own checking account for the payments and some bills. I pay some other bills and I pay all the food and basic needs form the house. Am I entitled to something?
I failed to mention we have been married for over 13 years.
I live in Washington State, my husband had 16 rental properties before marriage, I have worked in them cleaning and fixed things to get the units ready to rent. the mortgage was paid out of an account that had both our names on but the money came from the rental property by rents. We did deposit money into our account that was not our rental account to live off of. Do I have any form of equity asset to these properties, my name was never on the deed?
To SEEYOU,
The property will not be subject to the community property laws because it is not owed by spouses. It was purchased by the daughter in law and the father in law. The father in law’s share in the property will be determined by his share of ownership in the property. If he owns the property as a joint tenant and has equal ownership rights to the property, the proceeds from the sale of the home will be distributed equally among them.
To Wilderd,
The mortgage on the property is a community liability and it has to be paid off when the property is sold. The financial obligation has to be paid first before distributing the property among the spouses. This is why the loan balance is subtracted from the fair market value of the property. As far as I know, the Moore Marsden formula does not omit the mortgage. The calculations do include the down payment and the payments made towards the principal balance of the loan.
Hi Janice,
Unless your names are mentioned on the property deed, it will be difficult for you to claim any rights to the equity assets to these properties. Nevertheless, it will be better if you could contact an attorney and take his opinion in this matter.
Thanks
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
[size=9:4d62f5bd12][color=Red:4d62f5bd12][Email address deleted as per forum rules. Thanks.][/color:4d62f5bd12][/size:4d62f5bd12]
Is it true that only the principal paid by with Community Funds will be split but the interest paid on a house loan during marriage with community funds will be the separate property of the spouse who purchased the property before marriage? So in calculation, you need to know what the CP funds went to pay only the principal and those would be the funds that would be split 50/50; right?
the formula for comuity in a propertyand ware the imputs go
i understand the whole Moore Marsden aspect but what happens if you sell the first house the funds go into a joint account to purchase another home. We where married at the time and my name is on title. Does the Moore Marden stand? Thank you
DAUGHTER IN LAW AND FATHER IN LAW PURCHASED A HOUSE FOR 90K.
DAUGHTER IN LAW GETS DIVORCED WHAT IS THE PERCENT OF OWNERSHIP FOR THE FATHER IN LAW.
I live in California. My ex to be bought the house in 1987. We married in 1990. When he refinanced in 1997 he coerced me into signing a quit claim. He says I have no right to any interest in the house at all. I think I understand how the MMrule is calculated but this quit claim thing bothers me.
Thanks, Lucie
The a couple was married after the husband put money down in the first two years, had an 18 year marriage, wife did not work or contribute any monitary value but ran the household, is this calculated in?
Can MApp be a negative number if the property depreciated during the marriage? If so, how is that rationalized as being fair when community assets are used to pay off debt on a separate party investment, and the community gets nothing out of it simply because the separate party investment went south? Thanks.
Hi...What if community funds are contributed toward a SP business of one of the spouses? Does the Moore/Marsden rule only apply to real estate?
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?
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.
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
I bought a home in my name alone (w/his signature on quitclaim deed) while we were married. We refinanced last year to do improvements and put his name on deed to get the loan. We are now getting divorced. The home has lost so much value that either we owe more than it is worth or we may have about $100,000 equity in it. Many payments from the time I purchased it (in my name alone) were made from community property, and definitely all the payments made after the refi were made from community property. How is the interest calculation done in a case like this? Does he have a claim to the payments made from community property before his name was on the deed?
I owned the house before marriage, got married (but spouse's name was never on paperwork of house) and was married 5 years. During that time, I refinanced the house to buy him a truck which was paid in full for (10K). Then the market dropped out and the house is now upside down, would I be correct in assuming that the spouse who was not on the paperwork and no longer living in the house, would not be receiving any money from Moore Marsden interest?
Hi sinbad,
It does sound logical. As per the Moore Marsden rule, each spouse will get a share of the property if they purchased it while married and if the mortgage payments were made from community funds. The community property belongs to both the spouses and both of them should be liable towards its obligations. In case, your sister made most of the payments from her own fund, she should be entitled to a larger share of the community property. I think she should consult an attorney regarding this as I believe she has a right to claim a larger share of the property.
Thanks,
Jerry
Hi GF,
Your query has been replied to in the given page:
http://www.mortgagefit.com/annoucements/about43405.html
Take a look at it. Hope it helps you.
Thanks