Reimbursements in a Divorce Case
This issue is sometimes litigated in divorce cases. In California, there are many scenarios in which a Family Code (FC) 2640 analysis will apply. The most common one deals with reimbursement of a separate property down payment on a home.
FC 2640 is the foundation for recovery of her down payment and a three-step review must be madeFC 2640 is the foundation for recovery of her down payment and a three-step review must be made. First, the amount of the down payment must be identified. Second, the source of the down payment must be clear. This is typically from the sale of a property owned prior to the marriage, money in a bank or investment account prior to marriage, or a gift from a third-party, usually the parents of the spouse. Third, evidence needs to be provided to prove the FC 2640 claim*tracing of it to a separate source.
First, you can work backward. Review your escrow paperwork from the purchase of the house and it should identify the amount of the down payment. Once you have the specific amount of the FC 2640 claim, paperwork of the source of the down payment should also be obtained. The tricky situation generally is when a spouse it was a gift.
Family members, friends, and business partners are usually the source of the monies. I have had cases where this issue is heavily litigated. I have had a client state, it was a gift for both of them (thus a community) and not just solely to one spouse (separate property). A paper trail of the gift showing the intent is the strongest evidence but there are other ways to show intent if there is no documentation.
FC 2640 (b)FC 2640 (b) also specifically states, *that 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. The amount reimbursed shall be without interest or adjustment for change in monetary values and many not exceed the net value of the property at the time of the division.*
FC 2641 (c)FC 2641 (c) limits the reimbursement, *to the extent circumstances render such a disposition unjust, including but not limited to, the community has substantially benefited from the education, training or loan.* There is a rebuttable presumption that the community has not substantially benefited from community contributions if made less than 10 years before the commencement of the divorce proceedings.