HOW AND WHEN DO I CALCULATE MY MOORE-MARSDEN INTEREST?

QUESTION: This is a Calfornia Divorce: I was married with four children and then my husband and two of our four children passed away. I then obtained full ownership of the mortgaged property for me and two children. In 1996, I remarried and two days before doing so, closed on a refinance - my name only. The value at the time was $270,000. Two days later, I married. On 8/2000 I added my new spouse to the title and refinanced as I couldn't qualify alone. We are now divorcing and he's being very mean, wanting me to sell, stripping me of everything because I filed for divorce. I didn't want to but there is significant mental abuse that just doesn't stop. Any way, through refinance proceeds we remodeled a few areas in the home. Neither of us ever used funds earned during in the marriage to improve it, only refinance money. He is a contractor by trade and made the improvements. Key points regarding Moore-Marsden: 1) In the entire time of marriage, there's been 3 to 4 refinances that were each "Interest Only" loans and therefore there's never been a principal reduction;2) Further, in an attempt to secure current value of the property, I found that the "improvements" made were without "permits" and therefore have a negative effect on the value of the property. I trusted that in his 28 years as a contractor he was doing all the right things. Originally, it was a 3 bedrooms per the record but it can now only be counted as a 2 bedrooms and therefore has created Functional Obsolescence. The cost is too great to revert back. That puts the value generously, at max $500,000. In my understanding of Moore Marsden, because there were no principal reductions, Moore-Marsden calculation wouldn't apply. Is that correct, given these circumstances? Further, although we were married, could he claim sweet equity since he did the work and therefore Moore-Marsden is used? If the Moore - Marsden calculation is required, at what point should I calculate?

MY RESPONSE: Moore-Marsden calculations are utilised where the property remains a party's separate property after marriage, but community funds (such as earned income) are used to pay down the mortgage or improve the property. When you added your husband's name to title, you most likely converted your property to community property, subject to Family Code Section 2640 reimbursement of traceable separate property contributions that you put into the property, comprising your separate property share of the equity in the property at the time you converted the property to community property (you will need an appraisal based on comps at or about that date), plus any other separate property contributions that you put into the property after the conversion to community property. Refinance proceeds may be considered to be community property if the lender relied on the incomes of the parties (or either party) as opposed to the equity in the home in granting the refinance loan(s), pursuant to the holding in Marriage of GRINIUS. You will also need a Moore-Marsden calculation and expert appraisals for the pre-conversion community share, based on mortgage principal paydown (if any) and improvements made during the marriage before the conversion to community property. You would best retain an experienced Family Law Attorney to represent you in the divorce and/or retain a Forensic Accountant to obtain documents and information to enable him to evaluate the community and separate property shares in the property.

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