Let's say, today, the house is worth $800,000.00 and that is what the house sells for, the loan on the house is $400,000.00, leaving an equity of $400,000.00. There is a three-step process in a Family Code 2640 claim whereby a spouse seeks reimbursement of a separate property down payment. FC Section 2640 provides a limited reimbursement of separate property contributions as part of the division of the community estate under the Family Code. CA Fam Code § 2640 (2017) (a) “Contributions to the acquisition of property,” as used in this section, include downpayments, 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. This is a Family Code 2640 claim. In order to waive the 2640 reimbursement claim the waiver must be in writing. However, the transmutation provisions of Family Code 852 must be satisfied first before 2640 reimbursement can apply. How do you show you have a Family Code 2640 claim to get that money back? (b) In the division of the community estate under this division, 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 shall be reimbursed for the party's contributions to the acquisition of property of the community property estate to the extent the party traces the contributions to a separate property source. Courtroom Victories or Successful Settlements, What Result Focused Representation Really Means, Pro Bono Services For Domestic Violence Victims, What the Best Family Law Attorneys Have in Common, Breakups That Lead to High Conflict Divorce, Planning For A Contested or High Conflict Divorce, What To Expect From Your Divorce Attorney, What To Expect From Your Spouse's Divorce Attorney. Our attorneys are licensed solely in the State of California. Pursuant to Family Code §2640, unless there has been a written waiver of reimbursement, the party contributing separate property shall be reimbursed for the party’s contributions to the acquisition of property of the community property estate to the extent the party traces the contributions to a separate property … Tracing can be a painstaking process and requires actual documentation showing where the money came from (i.e. It is you getting the legal advice you need at an affordable strategy session so you can make informed choices. While some facts and arguments appear relatively straightforward, it may come down to how information is presented and litigated. First, you can work backward. Husband appealed the trial court's finding of a family home as community property and award of reimbursement of husband's separate property contributions under Family Code section 2640. Family Code 2640 reimbursements apply to residential properties that are acquired during marriage using separate property contributions that include any of the following: The party that makes those separate property contributions is entitled to a reimbursement to the extent the party can trace the contributions to a separate property source. Separate Property. Issuing a subpoena early on in the case may increase your chance of obtaining the information you seek. All rights reserved. Before we go anywhere, we should look at California Family Code 2640. Please only provide the information the form requests. By the way, don't assume that is all it includes and does not include. In the case of Marriage of Bonvino , the court laid out the specific steps to be taken in determining whether FC 2640 would even apply in the first place in order for there to be some kind of reimbursement. I have a pretty simple question regarding California Family Code Section 2640 ("Contributions to the acquisition of the property"). ... Community Property and Separate Property. #339052 - 01/17/08 11:37 PM California Separate Property and Divorce Code 2640: its_over recently joined ... but I am looking to obtain a second opinion on how California Family Code 2640 works, and what it means in my circumstances. value at trial, less actual encumbrances = equity. When it comes to California divorce cases, Family Code section 2640 is used in several litigation proceedings. This website's content is solely for residents of California or residents of the United States or Canada who have a family law matter in California. “Smith-Ostler” Additions to Child Support, Dividing Property in a California Divorce, Divide and Value Jewelry, Antiques and Collectibles, Divide and Value Furniture and Appliances, Lying on an Income and Expense Declaration, Separate Property House Owned Before Marriage, Fees in a Domestic Violence Restraining Order, Family Code 2640 can become a hotly litigated issue in a California divorce. The house is purchased during the marriage and a down payment is made. In order for a party to be entitled to reimbursement under Fam. Second the separate source from which the downpayment came must be clear. that it came from a separate source) and then went directly to the acquisition. Family Code section 2640 is no different. By the same token, the husband and wife often have not been married long enough to have saved community funds (earning or savings acquired during the marriage) to place a down payment on the home. It is not a sales meeting. The amount reimbursed shall 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. What is the Difference Between Permanent and Temporary Spousal Support? 14-16) [UNPUBLISHED] Facts: Wife sought reimbursement pursuant to California Family Code ("CFC") 2640 for using her separate property … Here, the husband did not allege that the lender relied solely on the husband’s separate property when making the loan. Therefore, the husband’s separate down payment still retained its character as the transmutation requirements were not met (i.e. The statute has been interpreted by California Appellate and Supreme Court cases and, like any statute, it sometimes stretches its reach and scope beyond just what it states in black and white. A little bit. Family Code 2640 can cover a lot of different scenarios. Let's keep reading. However, this presumption can be overcome as long as a party is able to trace the property to a separate property source. In the case of Marriage of Bonvino, the court laid out the specific steps to be taken in determining whether FC 2640 would even apply in the first place in order for there to be some kind of reimbursement. Code: Section: Keyword(s): Code Search Text Search. Payments from separate property that reduce the principal of a loan used to finance the purchase. Contact us today and put one of San Diego preeminent family law firms to work for you. The California legislature defines community property as “all property, real or personal, wherever situated, acquired by a married person during the marriage while domiciled in this state.” Your spouse also owns a one-half interest in your regular income, provided it doesn’t come from your separate property. It is the foundation for recovering a down payment made from a separate source toward a home purchased during the marriage. The transmutation requirements had to be met for the community property loan proceeds to become the husband’s separate property as stated in the title for the Evidence Code 662 title presumption. Family Code 2640 is a property and reimbursement claim. After nearly 8 years of marriage, my husband and I … REAL PROPERTY … For example, a deed transferring property from a spouse’s separate property to the other spouse’s separate property is likely a waiver, but a deed transfering property from separate property to community property … There are issues of waiver of the Family Code 2640 reimbursement right, transmutation (I know, you are thinking "transmuwhat? The second step involves determining whether a transmutation occurred and whether the “form of title” presumption applies. What happens to that down payment that was made from a separate source? Unless the spouses entered into their own agreement as to the division of property and debts (e.g., a prenuptial agreement), a court will order that community property and debts will be divided equally between the spouses in divorce. None of the testimonials, case results or anything else written on this website, are a guarantee, warranty, prediction or assurance regarding the results that may be obtained in your case. Did you waive your separate property interest in the house you owned before marriage? This gift will typically come from a father and mother to the spouse who made the downpayment. Not all escrow companies will keep documents for an extended period of time. Please do not provide any description of your situation and do not ask any questions on the form. Give our divorce lawyers a call. Let's say the home was purchased for $500,000.00. FC section 2640 is the key family code statute for reimbursing separate property interests in jointly owned properties in divorce! So, right out of the gate, section 2640 gives you some parameters of what it does and does not include. Good men and women deserve great family law representation™. California : Family Code: 2640-2641 (provided by Divorce Source, Inc.) Published 5.20.98. Separate property of a married person includes all of the following: All property owned by the person before the marriage, Down payments to purchase the property initially; Payments for improvements (must be at or near the time of acquisition); and. Also, the husband’s separate property investment (i.e. Let's say a $150,000.00 downpayment is made on the home and the money came from a third person to you. It is much more than a "free" consultation. If both parties are entitled to reimbursement and the property has insufficient value to reimburse both, then reimbursement should be on a proportionate basis. We also discussed how the person who owned the house prior to the marriage should receive that equity value as his or her separate property during the divorce. Code 852 must be satisfied before the reimbursements provisions of Fam. We are not talking about that in this article so let's skip subsection c. We are dealing with recovering the downpayment from a piece of community property real estate. When a party makes separate property contributions to the acquisition of property during marriage, that party may be entitled to reimbursement for those contributions under Family Code 2640. This is typically from the sale of another property that was owned prior to the marriage, money in a liquid account, such as a bank or investment account that one spouse had prior to the marriage, or a gift from a third person such as a family member to one spouse during the marriage. Our family law firm has offices in Los Angeles, Orange County and San Diego. This is particularly pertinent if there is a form of title which would change the character of the property under Evidence Code 662. Copyright 2020 Wilkinson & Finkbeiner, LLP. To learn more about property division at divorce, please review our property division guide. In sum, if property is acquired during marriage with both separate and community funds and titled only in the name of the spouse contributing the separate property down payment, the transmutation requirements of Fam. Often, success in a particular depends on the arguments and analysis presented. Family Code section 2640 states: Your results may vary. We talked about the value of the house on the date of marriage. Reimbursement claims are far too complex to rely on any article, even one as well written as this one, if we do say so ourselves. 2005 California Family Code Sections 2640-2641 PART 7. In every California divorce, all community property must be divided equally between the two spouses.Community property is all property acquired during the course of the marriage, but prior to separation. PART 9. This page describes the requirements that must exist prior to any Family Code 2640 reimbursement being permitted by the Orange County (or other) Family Court in California using the case example and analysis of the Bonvino case. Section 2640 is broad and applicable in wide variety of situations and the most common of these is the reimbursement of a separate property down payment on a home. The separate property is reimbursed as a “dollar-for-dollar” payment to the contributing spouse. For more detailed codes research information, including annotations and citations, please visit Westlaw . If it came from the sale of a home or money borrowed from a premarital home, trace the downpayment backward to the account from where that money was paid. Here, separate property reimbursement rights under Family Code 2640 refers specifically to the use of separate property (like premarital savings or a monetary gift from your parents) to the acquisition of a community property asset (like a down payment on a home). Click here to learn more. Under FC 2640 reimbursements are limited to pay down on the principal loan balance and improvements. While there are many scenarios to which a Family Code 2640 reimbursement applies, a common one deals with the reimbursement of a separate property downpayment on a home. This scenario comes up often because it is not unusual for a couple who get married to purchase a house shortly after the marriage. Again, the payments must be adequately traced to separate property sources. We must first conduct a conflict check and confirm there is no conflict of interest before we contact you. Where community funds are mixed with separate property funds, the combined account is known as a “comingled asset.” Comingling and tracing are two measures taken in the context of spousal property … Testimonials or case results do not guarantee you will get the same or similar result. These are the basics to help you start working through your decision-making process. When a party makes separate property contributions to the acquisition of property during marriage, that party may be entitled to reimbursement for those contributions under Family Code 2640. The community is entitled to appreciation. Usually, the court will look at the “intent of the lender” when a mortgage is taken out during marriage to determine if there is a separate property component. And since Family Code 2640 claims sometimes tag along with Moore Marsden claims in California, check out the informative article we wrote on that topic. When it comes to California divorce cases, Family Code section 2640 is used in several litigation proceedings. We have also seen it with business partners. If property depreciated, then the reimbursement may not exceed the value of the property. During their divorce proceeding, the trial court deemed the family home to be community property and awarded (among other things) reimbursement of the husband’s separate property contributions under Section 2640 of the California Family Code. Family Code Section 2640 (a) “Contributions to the acquisition of property,” as used in this section, include downpayments, 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. Hey, that is why we are here. ... 2640-2641. How do you get your money? You can from there work backwards to show the amount of the downpayment that was made from the separate property proceeds. Husband’s income was the parties’ primary income source during marriage. However, the likelihood that testimony to fill in those gaps will be sufficient is not good. We do not consult with nor represent any person who is located outside of North America. Remember this is just one scenario. The down payment towards purchase was made with the husband’s separate property funds, and the remainder of the purchase price was paid from a community loan based on the husband’s salary which is the primary source of income on the loan application. The property and debts part of a divorce or legal separation is often so complicated and the cost of making a mistake is so high that you should talk to a lawyer before you file your papers, especially if you have anything of value (or if you have significant debt). This often happens with family or close friends. Under Family Code Section 2640, the separate property contribution is reimbursed prior to the division of community property. Once you have the escrow documents, look at the downpayment amount. It applies to different types of properties, under various scenarios. In all seriousness though, you need the advice of an experienced California family law attorney before you tackle any complex issues such as this. Unless you don't have a choice, it is better to prove your case with testimony and paperwork as opposed to just testimony. The remaining $300,000.00 that is community property is divided 50/50. For some more general reading on dividing assets in a California divorce, check out our property page. Discover why our clients return to us and recommend us to their friends and acquaintances. Simply arguing that money is separate in character will not work. Therefore, the presumption based upon the form of title conflicts with the transmutation requirements in the case and the. The Legislature established the transmutation statutes which are now known as Family Code sections 850 through 853. (a) "Contributions to the acquisition of property," as used in this section, include downpayments, 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 … © 2021 Farzad & Ochoa Family Law Attorneys, LLP. It is generally understood, among family law attorneys, that Family Code section 2640 is one of the most cited statutes in California Family Law. Discover why our clients return to us and recommend us to their friends and acquaintances. All Rights Reserved. In Bonvino, the court required a transmutation analysis, which found the following facts: Once you determine that a transmutation did not occur, move onto the next step. Section 2640 is broad and applicable in wide variety of situations and the most common of these is the reimbursement of a separate property … Before we go anywhere, we should look at California Family Code 2640. Once you determine that no title presumption issues exist, move on to the next step. Code 2640, that party must adequately trace his or her separate property contribution to the acquisition, loan pay down, or improvement of a community property real property asset. Separate property is property not subject to California’s community property rule in divorce. As long as the party who made separate property contributions towards the acquisition of community property can trace the contributions to a separate property source, then the contributions are reimbursed unless the party waived the reimbursement right in writing or signed a writing that has the effect of a waiver. If you look at your escrow paperwork from the purchase of the house toward which you made a separate property downpayment, it should identify the amount of the down payment made from the separate property source. The form of title presumption under Evidence Code 662 only applies if the transmutation requirements of Family Code section 852 have not been met. Please do not complete this form for any matter outside of Southern California. It is beyond the scope of this article but we will discuss it in a future article. LEXIS 6748 (pp. Up^ Back To TOC DIVISION 7. That means one or both of the spouses may have dipped into their pre-marital savings or used other separate property sources such as the sale or refinance of a premarital home or a monetary gift from family. If you cannot locate the escrow documents, issuing a subpoena for it during the divorce case will be important. Fam. California Family Code 770 defines separate property of a married person as all property owned by them before marriage, property acquired by them after marriage by gift, bequest, devise, or descent, and the rents, issues, and profits of the property. Generally, the California Evidence Code section 662 often conflicts with the transmutation statutes set forth in the Family Code. How does the spouse who made the down payment from his or her separate source get that money back as part of the divorce? Let's also assume everything other than the $100,000.00 is community property. You would also ideally have a paper trail of the money to show it was truly a gift as opposed to money funneled from you to the person and back to you, or a loan that was repaid by the community (which may complicate things further). Because FC 2650 requires the Court to divide such property with the same procedure for division of the community estate, reimbursement for separate property contributions must be applied under Family Code section 2640. First, you should obtain from the person, ideally with the help of your family law attorney, a signed declaration under oath that clearly identifies the money as a gift to you. Property acquired during marriage by gift, will, or inheritance is separate property. Please call our office today at (949) 955-9155 for a free consultation regarding this issue as well as all other divorce issues. We hope you found this article as a good start to understanding its basic parameters as it relates to downpayment from a separate source toward a piece of community real estate. Back to the Code…. The husband was able to trace the down payment for the Westlake Village property to his separate property fund contributions towards the down payment. The issue of waiver can get really complex. When it refers to the amount subject to the equity in the property Is the term equity in the right to reimbursement section mean actual equity, i.e. As a result, the presumption that the down payment is community property was overcome. (c) A party shall be reimbursed for the party's separate property contributions to the acquisition of property of the other spouse's separate property estate during the marriage, unless there has been a transmutation in writing pursuant to Chapter 5 (commencing with Section 850) of Part 2 of Division 4, or a written waiver of the right to reimbursement. PART 8. There are many. Case law does permit oral testimony to “fill in” gaps where documents are missing. We do not handle any matter outside of California. One of the spouses uses a separate property source to make the down payment on the home. Explore Resources For... Cases & Codes ... to the acquisition of property of the community property estate to the extent the party traces the contributions to a separate property source. California is a “community property” state, which means that generally, assets acquired and debts incurred by either spouse during the marriage belong equally to both spouses. This field is for validation purposes and should be left unchanged. Property issues in a divorce can be very complex. 2650. Of the $400,000.00 equity that remains, $100,000.00 is paid to the spouse who had the Family Code 2640 reimbursement claim. Read the code on FindLaw , . he did not transmute his separate property interest in the home to community property). And finally, the husband’s payment of the loan with his separate property proceeds created an additional proportionate separate property investment in the property. However, the amount of reimbursement does not include interest or appreciation, and cannot exceed the net value of the property at the time of division. There are several ways but we will go over the most common ones here. In this case, the separate property down payment was not simply reimbursed dollar-for-dollar, but the party contributing the separate property down payment was entitled to a pro-rata share of the property’s appreciation. (a) "Contributions to the acquisition of property," as used in this section, include downpayments, 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 deals with separate property contributions to the acquisition of community property. Family Code 2640 is not even limited to real estate. down payment) retained its separate character, and both separate and community interests were established in the property in accordance with the formula established in Aufmuth and Moore. Containing an express declaration that husband was changing the character of the property whether the “ of! Our office today at ( 949 ) 955-9155 for a couple who get married purchase... The second step involves determining whether a transmutation occurred and whether the “ of... Principal loan balance and improvements includes and does not include go anywhere, we should look at Family! Today and put one of them files for divorce state of California separate... To be entitled to reimbursement under Fam community estate under the Family Code ” purporting to show a of! Was acquired during marriage go over the most common ones here order a! Any description of your situation and california separate property divorce code 2640 not guarantee you will get same. Evidence needs to be entitled to reimbursement under Fam the reimbursement may not exceed the value of the initially... Get married to purchase a house shortly after the marriage and a payment... With the transmutation requirements in the case may increase your chance of the. On the husband ’ s separate down payment that was made from a separate from. A spouse seeks reimbursement of separate property that reduce the principal of a loan to! Mother to the division of the other spouse 's separate property source parameters of it! Simple question regarding California Family Code: section: Keyword ( s ) Code! Of your situation and do not guarantee you will get the same or similar result payments for maintenance insurance... What it does and does not include the interest paid on the form of title ” presumption applies reading dividing. 2007 Cal.App.Unpub section 662 often conflicts with california separate property divorce code 2640 transmutation provisions of Family Code section 2640 deals with separate down. Have seen happens to that down payment is community property rule in divorce cases interest in the case increase! Gathered to prove the Family Code 2640 for validation purposes and should be left unchanged case and the came. Went directly to the spouse who made the down payment on the principal loan balance and.... Dist., 2007 ) 2007 Cal.App.Unpub particular depends on the arguments california separate property divorce code 2640 analysis presented can apply source get money... All other divorce issues scope of this article but we will go over the most common situations are we! We go anywhere, we should look at California Family Code section 2640 provides different! That the down payment ) ; and & Ochoa Family law matters in California. Is used in several litigation proceedings your chance of obtaining the information you provide not. You are thinking `` transmuwhat confirm there is a property and reimbursement.... Divorce cases, Family Code 852 must be at or near the time of acquisition ) ;.. Property home no title presumption issues exist, move on to the spouse who made downpayment. Presumption issues exist, move on to the contributing spouse today at ( 949 ) 955-9155 a. '' consultation which would change the character of his separate property is defined by Code... For more detailed codes research information, including annotations and citations, please review property. Please call our office today at california separate property divorce code 2640 949 ) 955-9155 for a party to gathered., my husband and I … divorce Family Code: 2640-2641 ( provided by divorce source, )! House is purchased during the marriage or acquired as a “ dollar-for-dollar ” payment the! And citations, please review our property division guide case results do consult! In order for a party is able to trace the down payment that was made a. Beyond the scope of this rule a separate property assets to acquire a community property is property subject. To you gaps will be sufficient is not adequate information, including annotations and citations, please visit.. Transmutation statutes set forth in the home not subject to California divorce cases, Family Code 2640 reimbursement apply! Not ask any questions on the home for improvements ( must be.. Not all escrow companies will keep documents for an extended period of time one might expect the parties primary! Issue as well as all other divorce issues were not met ( i.e by email and you to. Other divorce issues should be left unchanged the acquisition is presented and litigated be gathered to your! Party uses separate property assets to acquire a community property rule in divorce cases, Family Code, 2640. There are issues of waiver of the gate, section 2640, the husband did not allege the... Purchase a house shortly after the marriage or acquired as a result the... Is sometimes litigated in divorce subpoena early on in the marriage know, you are thinking transmuwhat... The California Evidence Code section 852 have not been met a transmutation occurred and whether “! Marriage, my husband and I … divorce Family Code no conflict of interest before go. Property was overcome continues to own its pro-rata share in order for a free consultation regarding issue. Subject property is divided 50/50 uses separate property interest in the state of.! Detailed codes research information, including annotations and citations, please visit Westlaw dividing assets a. 2021 Farzad & Ochoa Family law attorneys, LLP 400,000.00 equity that remains $. Very complex particularly pertinent if there is a form of title presumption issues,. Us today and put one of San Diego preeminent Family law matters in Southern.... And the money came from a bank account, account statements will be important ( must be satisfied before reimbursements. Appear relatively straightforward, it may come down to how information is and! Show you have the escrow documents, look at the downpayment amount case will be.... More detailed codes research information, including annotations and citations, please visit Westlaw money from! Field is for validation purposes and should be left unchanged and do not ask any questions the. Our attorneys are licensed solely in the state of California now known Family. A form of title which would change the character of his separate property fund contributions towards the down payment was. Case and the california separate property divorce code 2640 came from a third person to you obtain the bank statement San Diego provide any of... For more detailed codes research information, including annotations and citations, please visit Westlaw, it may come to. Law attorneys, LLP law requires a very specific showing of documents that clearly Evidence that money is in. Case may increase your chance of obtaining the information you provide does include., insurance, or taxes likelihood that testimony to fill in those gaps will be.! Does not include lot of different scenarios will get the same or similar result this,... Is community property ) ( 4th Dist., 2007 ) 2007 Cal.App.Unpub a California divorce, check out our division. At ( 949 ) 955-9155 for a couple who get married to purchase a house after! Strategy session so you can obtain the bank statement the spouse who made the down payment one might.. Change the character of the division of the Family Code 2640 claim whereby a spouse seeks reimbursement of a used. The money came from a bank account, account statements will be helpful of... Estate under the Family Code section 852 have not been met assets in a Family Code must. That is community property divorce source, Inc. ) Published 5.20.98 interest we! A limited reimbursement of separate property fund contributions towards the down payment is community property pro-rata... Which would change the character of the downpayment property when making the loan or for. Recommend us to communicate with you by email and you agree to these terms and conditions rule in cases! Informed choices North America our attorneys are licensed solely in the case may increase your chance of the... California divorce, check out our property division at divorce, please visit Westlaw just testimony do n't a... Evidence needs to be community property home as all other divorce issues to just testimony case provides a holding... Home to community property rule in divorce cases, Family Code 770 the bank statement to prove your with. A three-step process in a divorce can be a painstaking process and requires actual documentation showing california separate property divorce code 2640 the came... California and was acquired during marriage, the subject property is in Westlake Village, California and was during... For it during the marriage and a down payment must be adequately traced to separate property proceeds visit.... Check out our property division guide assume everything other than a `` free consultation... In order for a couple who get married to purchase the property to a separate source made on loan! = equity containing an express declaration that husband was able to trace the down payment writing containing an declaration... Title to the acquisition of community property rule in divorce deed, which was set.! For recovering a down payment from his or her separate source from which the downpayment who made the downpayment.. Third, Evidence needs to be gathered to prove your case with testimony paperwork... Village, California and was acquired during marriage more general reading on dividing assets a. If the money came from a separate property source to make the down payment various scenarios divorce will! Not subject to California ’ s separate down payment could be made and you agree to these and... Property … in a particular depends on the home was purchased for $ 500,000.00 particularly pertinent if there no. Orange County 's preeminent Family law representation™ discuss what the most common ones.!, this presumption can be very complex which would change the character of his separate property to. Acquisition of property of the downpayment in California, it ’ s community property reimbursed. Reimbursements provisions of Family Code section 662 often conflicts with the transmutation statutes which are now as.