FAQ's - My Husband Owned Our Residence Before Marriage.
What Are My Rights?
Q. My husband owned our residence before marriage. What are my rights?
A. The very first question is: Are you on title?
If your husband owned the house before marriage, but added your name to title during marriage for any reason (estate planning, refinances), then a transmutation
has occurred and the house is now community property, subject to a Family Code section 2640 reimbursement to him for the equity he had in the property as of the date of the transmutation.
Q. I am not on title. But we paid the mortgage for 13 years!
A. There is a very important concept under California Law involving what is generally known as "Moore-Marsden apportionment." It applies to a common situation where a home is acquired before marriage, title is in the name of the acquiring spouse alone, and during the marriage and up to separation or divorce filing the mortgage is paid down with community funds.
Where this occurs the community estate acquires a legal, reimbursable, interest in what would be otherwise be entirely the separate property of the titled spouse IF community funds (earnings of either spouse, for instance, or both) are used to make the mortgage payments. The idea is that joint funds are being used to benefit a separate property interest, i.e., the separate property equity. Many legal scholars consider this to be a breach of fiduciary duty - that whenever one or the other spouse's separate property interests are increased with community funds, or community time, skill, and efforts of either spouse during the marriage, the community is disadvantaged and that this disadvantage violates the statutory duties of the parties that place the party's joint interests above their separate interests.
The formula for apportionment is that the community acquires a pro tanto (dollar for dollar) interest in the ratio that principal payments on the purchase price made with community property bear to payments made with separate property. Hence, any increase in value (appreciation) must be apportioned accordingly between the separate property and the community property estates upon separation or dissolution.
Note that this only applies to separate property owned prior to marriage with a mortgage that was paid during marriage where an equity position has been increased. For instance, if a mortgage exists but it is an interest only mortgage, payments during marriage do not reduce principal. Therefore, the separate interest of the owner spouse is not improved because the debt remains exactly the same. As a general rule, the amounts paid for interest, taxes, and insurance on the house are disregarded since that portion does not to contribute to the capital investment.
Also, it assumes that the mortgage was paid with joint (community) funds, or that the funds used were so commingled that the "separatizer" is unable to trace them to a separate property source (meaning they don't have records showing where each payment was made or are unable to provide a recapitalization of the source of the funds). If your husband reduced the mortgage throughout the marriage but he did it with an account that was his separate property then the community would not have this reimbursement right.
In your case, with a lengthy marriage and little owing, you have significant Moore-Marsden entitlements.