Diving the Family Residence: A Moore/Marsden Scenario

Often, a spouse enters a marriage already owning a house; that house is the spouse’s separate property since it was purchased prior to marriage. 1 Also quite frequently, after marriage, the community pays down the principal on the house. In such a case, the community is entitled to reimbursement for the funds used to pay down the principal, plus a pro tanto interest in the equity of the house, as explained in detail below.

In California, if the community contributes to the payment of an appreciating separate property asset, the community earns a pro tanto interest in the appreciation of the asset from the date on which the first community contribution is made. The formula for determining the amount to which the community is entitled is set forth in the Moore/Marsden Rule.

The Moore/Marsden Rule derives from California cases called Marriage of Moore 2 and Marriage of Marsden 3 . In the Marsden case, the Husband purchased a house prior to marriage. As such, that house was his separate property. The Husband began paying the mortgage prior to marriage, but after Husband married Wife, the community began paying down the mortgage on the house. The Court found that the community was entitled to dollar for dollar reimbursement for the money spent paying down the principal of the loan on the house, plus a pro tanto share in the home’s marital appreciation.

To determine the community’s share, the Court first determined the percentage of the purchase price that the community had paid (by dividing the total payments made by the community by the purchase price). The Court then looked at the value of the house on the date of marriage and the value of the house at the time of trial to determine the marital appreciation. The Court took the percentage of the house paid by the community and multiple it by the appreciation of the house during marriage to determine the community’s share of the marital appreciation.

Finally, to calculate the overall community interest in the house, the Court added the dollar amount of the payments made to the community’s share of the marital appreciation. (Wife was entitled to half of that amount.) If your spouse purchased a house prior to marriage, but the community made mortgage payments that reduced the principal amount owed, the community is likely entitled to a pro tanto share in the marital appreciation of that house. However, the analysis can be confusing and becomes more complex if you refinanced or improved the property with community funds during the marriage. A family law attorney can help tease out the uncertainty and ensure you receive that to which you are entitled.

 


1 See Family Code § 770.
2 28 Cal.3d 366 (1980).
3 130 Cal.App.3d 426 (1982).

Moore Marsden

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