California Family Code section 2640 provides for reimbursement of one spouse’s separate property “contributions to the acquisition of property.” The exact language of Family Code section 2640 is listed below. A simple example would be one spouse’s down payment of funds from a separate property source such as inheritance for the purchase of a community residence. Wife inherits $20,000 from her mother’s death. Husband and Wife decide to purchase a residence while married. Wife is the only contributor of the down payment for the home, paying $10,000 from her separate property inheritance. Husband and Wife decide to dissolve their marriage and sell the home. Wife makes a claim for reimbursement per Family Code Section 2640. Assuming Wife can prove the $10,000 came from her separate property, at the time of sale Wife will receive the first $10,000 of net sales proceeds and the remaining net sales proceeds will be divided equally between the Parties. Wife is not entitled to any interest on her down payment. If the Parties’ home has negative equity, and is sold for less than what is owed, there is no reimbursement to Wife — her funds are lost. If you think you may have such a claim or need assistance asserting such a claim, contact our office today to set up your free consultation (916) 782-2737.
CA Family Code Section 2640
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.
(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. 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.
(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. 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.