The California Family Code can be a little hard to decipher by oneself. Here’s everything you need to know about California Family Code Section 2640: reimbursement for separate property.
California Family Code Section 2640 reimbursements apply when one party uses separate property assets to acquire a community property home. The separate property is reimbursed to the contributing spouse “dollar-for-dollar.”
Under California Family Code Section 2640, reimbursement for separate property is limited to down payments, payments for improvements, and payments that reduce the loan principal used to finance an improvement or purchase of property. One cannot be reimbursed for payments of interest on a loan, insurance, maintenance, or taxation of the property. The amount of the reimbursement cannot be more than the net value of the property at the time of division.
In order for the contributing spouse to be entitled to reimbursement under California Family Code Section 2640, they must be able to trace their separate party contribution to the acquisition, loan pay down, or improvement of a community property real property asset.
Steps to Determine California Family Code Section 2640 Reimbursements
1. Determine the Characteristic of the Property
Any property that is acquired during a marriage is automatically community property. However, if a spouse is able to trace back the property to a separate property source, then the community property presumption can be overcome.
Related: Community vs Separate Property in California
2. Determine Whether a Transmutation Occurred as to the Separate Property Contributions and Whether the “Form of Title” Presumption Applies
In order to figure out whether a transmutation occurred, couples must look to the Family Code sections 850 through 853. These sections claim that transmutation is not valid unless it is written through an express declaration that is made, joined in, consented to, or accepted by the spouse whose interest in the property is adversely affected. As long as the transmutation statutory requirements are met, the transmutation of the character of the property can be valid from separate to community property or community to separate property.
In order to figure out whether the “Form of Title” presumption applies, spouses must turn to the California Evidence Code Section 662. California law claims that the title is presumed to be as stated unless disputed by clear and convincing evidence. It is generally found that the California Evidence Code Section 662 often conflicts with the transmutation statutes set forth in the Family Code.
Related: Transmutation of Property in a California Divorce
3. Determine Whether the Spouse is Entitled to Separate Property Reimbursements Under Family Code Section 2640
Family Code Section 2640 provides a limited reimbursement of state property contributions as part of the community estate under the Family Code. This means that as long as the spouse who made the separate property contributions towards the acquisition of community property can trace those contributions back to a separate property source, then the contributions can be reimbursed. The one exception to this ruling is if the spouse waived the reimbursement in writing or signed writing that has the effect of a waiver. 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.
Contributions are limited to improvements, down payments, and the reduction of the principal of a loan that financed the purchase or improvement of the property. Contributions cannot include the interest paid on the loan or payments for insurance, maintenance, or taxation of the property.
FAQs About California Family Code Section 2640: Reimbursement for Separate Property
What is a 2640 claim?
A 2640 claim is the foundation for recovering a down payment made from a separate source toward a home purchased during marriage.
How do you transmute a property from community property to separate property?
In California, a valid transmutation must satisfy specific requirements outlined in the Family Code. Transmutations occurring after 1985 require a written declaration explicitly stating that the spouses intend to effect a change in the character of ownership regarding the property. This declaration must furthermore be acknowledged and accepted by the spouse whose interests in the property are adversely affected by the transmutation.
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