One of the most complicated aspects of divorce is dividing property and assets that both parties own, or community property. If you are currently going through a divorce involving real property, you may come across the phrase “Moore/Marsden calculation.”
Understanding what this is and how it might affect your dissolution of marriage is important to prepare for the weeks ahead. Here is what you need to know about this calculation in California.
California Divorce Laws
California Family Code Section 2640 grants the right to reimbursement for separate property contributions toward community property and for community property contributed to the individual property of one spouse. If this code sounds confusing, don’t worry.
This is where the Moore/Marsden calculation comes into play, to make it simpler to calculate each party’s interest in real property when one spouse bought the property prior to marriage.
If one spouse purchased the property prior to marriage, and has a mortgage partially paid off throughout the marriage or partnership, the Moore/Marsden calculation becomes involved. The issue is that the spouse that originally bought the asset has a separate, premarital interest in the property.
However, the couple used community property money to further fund the property, thus creating a community property interest. Figuring out how to divide this property takes a special equation, especially if a mid-marriage refinance or post-separation charge/credit occurs.
What is the Moore/Marsden Calculation?
The Moore/Marsden Calculation stems from two court cases in California: In re Marriage of Moore and In re Marriage of Marsden. Moore was a Supreme Court of California case, while Marsden was an appellate case that further clarified the ruling in Moore.
These two cases held that when the community in a marriage pays down principal, the community may receive a dollar-for-dollar reimbursement as well as a pro tanto (as far as it can go) share of the property’s appreciation from the date of marriage to the date of the trial. Thus, we have the Moore/Marsden calculation, which is as follows:
- Add together the dollar-for-dollar reimbursement and the pro tanto share and you get the community interest in the property. Multiply this by this equation:
- Numerator = Community property payments of principal
- Denominator = Purchase price of the home
To determine the separate interest in the property, the courts use a different formula (the Separatizer formula).
In this formula, the Separatizer (the party who owned the home prior to marriage) is reimbursed for the downpayment, premarital appreciation of value of the home, principal payments made and improvements paid for by the Separatizer (only if they increase the value of the home).
The Separatizer’s interest in the home also includes the appreciation of the home’s value between the date of marriage and the date of the divorce trial.
A Look at the Moore/Marsden Calculation in Action
Here is an example of the Moore/Marsden formula at work: Party A purchased a home for $400,000 in 2013. Party A made a down payment of $50,000 and paid an additional $100,000 before Party A married Party B in 2015. At this point, the price of the home is $500,000. Once married, both parties paid another $100,000 of principal. On the date of the trial in 2017, the home is worth $700,000.
Using the Moore/Marsden calculation, the community would receive $100,000 for reimbursement of the pay down of principal. In addition, the community would get $200,000 (the appreciation of the home from marriage to trial) multiplied by the fraction $100,000 (community property payment of principal) over $400,000 (purchase price of home).
The community interest would thus be $150,000 ($100,000+$200,000 x [$100,000/$400,000]), not counting the Separatizer calculation.
How Can the Moore/Marsden Calculation Impact a Divorce Case in San Diego?
It is important to correctly apply the Moore/Marsden calculation in your divorce case in California, as it can have a major impact on how the property is divided and the amount of money you receive as your fair portion. When done properly, this calculation can ensure the fair division of a home by reimbursing the contributions of both spouses, even if the home was originally owned by only one of them prior to marriage.
Accurately calculating your own interest in a shared home can influence your overall financial settlement, which can in turn affect decisions regarding child support, spousal support and the division of other types of community property. Finally, an accurate calculation can make it possible to leverage your property interests during divorce settlement negotiations.
You can craft a stronger legal strategy with a clear idea of what an equitable outcome looks like for you. Without an understanding of the Moore/Marsden calculation, on the other hand, you could be at risk of allowing your ex-spouse to wrongly claim 100 percent of the home’s equity as his or her own (as the property owner). Correctly navigating this concept can make an enormous difference to your financial outcome as the non-owner.
Tips for Dividing the Family Home in a California Divorce
It can be difficult to make decisions regarding how to equally and fairly divide a shared family home in a divorce case. Whether you bought the house together or one of you owned the home prior to marriage, you will need to know how to successfully navigate California’s separate and community property laws.
Use these tips to make the process as simple and rewarding as possible:
- Know the value of your home. Hire a professional real estate appraiser to get a true and accurate property value in the current housing market.
- Understand mortgage and equity. Determine how much equity you have by subtracting your remaining mortgage payments from the home’s current market value.
- Review relevant documents. Verify whose name is on the title of the house and the mortgage loan. Collect financial records showing where the funds to pay the mortgage came from.
- Consider your options. Depending on the specific circumstances, you and your spouse may have options such as selling the home and dividing the proceeds or one spouse buying the other out. Review all of your options carefully before making a decision.
- Hire a property division attorney in San Diego for assistance. In cases where one spouse bought the home prior to marriage, attorneys can be invaluable. Your lawyer will have a wealth of knowledge regarding Moore/Marsden calculations and how to properly determine each spouse’s equity.
Dividing the family home in a San Diego divorce case isn’t just about the finances; it can also be an emotionally difficult task for you and your spouse. A knowledgeable and compassionate divorce attorney can guide you through this difficult process with personalized care and guidance.
Learn More About Moore/Marsden Calculations
It is very rare to have a straightforward Moore/Marsden calculation during real-life divorce proceedings. Usually, a married couple makes improvements to the home, refinances, or makes a change in title that will alter the original equation. It is important to discuss your situation with an experienced San Diego family law attorney in California for more specific answers to your property division questions.
Speak with some of the best San Diego divorce attorneys at Boyd Law for legal counsel regarding your pending divorce and answers to any property/asset division questions you may have.
