Property division can be one of the more painstaking and important aspects of a divorce in California. Generally, community property is eligible for distribution, and separate property is not. However, the lines can be easily blurred, which makes it challenging to determine whether a piece of property is community property or separate. California Family Code Section 2640 provides some guidance on how to navigate this gray area regarding community real estate and separate property funds.

California Family Code Section 2640

The California separate property divorce code 2640 states that a spouse who uses separate property to purchase a community property home can be reimbursed for the contribution from their separate funds. These reimbursements can be requested for residential real estate that was obtained during the marriage, including money that was used for:

  • Initial down payment on the property

  • Improvements or renovations made at or shortly after the purchase

  • Reducing the principal of the mortgage or renovation loan

Limitations on these reimbursements of separate property in the California Family Code include:

  • The funds must be traceable to a separate property source.

  • The reimbursement amount is dollar-for-dollar rather than being adjusted for inflation or interest.

  • The total amount of reimbursement cannot be greater than the net property value.

The Process for Receiving Family Code 2640 Reimbursement

Tracing the separate property contribution is critical for the success of a Family Code Section 2640 claim. This can be a complex and tedious process that requires extensive effort. Additionally, documentation that clearly evidences that the money originated from a separate source is necessary because although oral testimony is allowed, it is often insufficient proof.

If you are planning on requesting reimbursement using Family Code Section 2640, it may be helpful to understand what steps the court will take to determine if you qualify.

Classify the Property

In California, the presumption is that an asset obtained during the marriage is community property. Any spouse wishing to request Family Code 2640 reimbursement will need to overcome this presumption and prove that their separate property was used. Courts may also consider the intent of the mortgage lender if the separate property was used as a down payment.

Identify Transmutation

Transmutation is the process of changing something into a different form. In the context of property division, it means that an asset or debt has changed from being separate to community property or vice versa. A transmutation must be stated in writing and consented to or accepted by the other spouse.

Overcome the Title Presumption

The title presumption law in California may contradict or conflict with transmutation guidance. This is a statute that says the owner listed on a title is presumed to be the actual owner unless clear and convincing evidence exists to prove otherwise. If you have questions about your property’s title and whether it will impact transmutation and property division, contact Sarieh Law Offices. We have extensive experience working with clients who are facing property distribution challenges in California.

Are you Entitled to Family Code 2640 Reimbursement?

It’s important to understand the requirements for separate property reimbursement, especially since the guidelines are strict. The most important element to remember is that you must be able to trace your funds back to a separate property source. As long as you can trace your separate property contributions and you did not previously waive your right to reimbursement, you should be able to receive the funds under Family Code 2640.

The Family Code Section regarding transmutation must be considered before applying reimbursement eligibility factors. Family Code Section 852 discusses the requirements for transmutation, which include:

  • An agreement must be made in writing.

  • The agreement must clearly express the intention that the ownership of the property will change.

  • The spouse who is adversely affected by the transfer of ownership must sign the agreement.

Gifts that are of nominal value based on the financial situation of the spouses are not included in these transmutation requirements if the gift is tangible, personal, and used mostly by the spouse receiving the gift.

Transmutation is a complicated topic, but it is a key component of Family Code 2640 reimbursement consideration. It’s important to clearly determine if separate property has transmuted into community property before reimbursement can occur.

Contact a California Family Law Attorney

If you think that you are eligible for reimbursement under Family Code 2640, contact Sarieh Law Offices. Even the most seemingly simple property division cases can quickly become complicated. Having an attorney experienced in transmutation and separate property contributions can make a significant difference in the outcome of your divorce case. Schedule your free case evaluation with Sarieh Law Offices today.