Characterization & Allocation of Equity in Real Property

What Factors Does a Family Law Court Analyze in Determining the Characterization of Equity and Reimbursements Relative to Real Property?

California family law courts allocate the increase in equity in real property during the marriage to the community and/or the separate property of the parties based on a number of factors:

• Changes in title
• Date of acquisition
• Source of funds used for acquisition, improvements and/or principal payments on a loan
• Increase in value
• Refinancing

Can the Community Acquire an Interest in the Separate Property House of One Spouse?

California family law dictates that the community may acquire an interest in real property if community funds are used to make principal payments on a mortgage secured by a residence owned solely by one spouse (IRMO Moore/IRMO Marsden). Payments on an interest only loan do not create a right to reimbursement or an ownership interest in the property.

If community money is used to improve a separate property, there may be a right to reimbursement.