When Separate Property Becomes Joint: Understanding Moore/Marsden and Family Code §2640 After a Refinance
/“If I inherited a home during the marriage, and later we refinanced it into both of our names, do I still get my separate property back?”
The short answer is: Yes, but how we calculate it depends on timing—and two key tools in California law: the Moore/Marsden formula and Family Code §2640.
The Setup: Inherited Property + Refinance + Community Payments
Let’s say one spouse inherits a home during marriage—so it starts off as that spouse’s separate property under California Family Code §770. Over time, the couple pays the mortgage using community funds. Then, they refinance and put the home in both names, changing the character of the property to community property.
So now we’ve got three things going on:
1. The home was separate property by origin (inheritance).
2. The couple used community funds to pay down the mortgage.
3. The couple later transmuted the home to community property by going on title together.
Where Moore/Marsden Comes In
The Moore/Marsden formula is used to determine the community’s interest in a property when community funds were used to pay down the mortgage on separate property. It doesn’t just reimburse the amount of principal paid—it also gives the community a proportional share of the property’s appreciation.
But once the property is transmuted to community property—by adding the non-owner spouse to title—the legal landscape changes.
Where §2640 Steps In
If there was no express waiver of the original owner’s separate property rights (which is common), then Family Code §2640 applies. This statute allows a spouse to reclaim their separate property contributions, even when the asset is now community property—but only dollar-for-dollar, without interest or appreciation.
Here’s the key: To know how much to reimburse under §2640, you first need to calculate what portion of the property was still separate at the time of the refinance. That’s where the Moore/Marsden formula helps.
So, yes—Moore/Marsden is still relevant, but only to establish the separate property value as of the date the title was changed. After that point, the home is treated as community property, and future growth or payments belong to both spouses equally (unless agreed otherwise).
Putting It All Together
If you’re in mediation or litigation involving an inherited property that was later refinanced into joint names, here’s the usual sequence:
1. Use Moore/Marsden to calculate the separate vs. community interests up to the date of refinance.
2. Use that value as the basis for the separate property reimbursement under Family Code §2640.
3. Divide the remainder of the equity equally (assuming no other agreement exists).
Why This Matters
This scenario comes up all the time, especially when couples mix separate and community finances without formal agreements. Being able to trace and distinguish contributions—especially when inheritance and transmutation are involved—can make a major financial difference in divorce outcomes.
If you’re navigating these questions in your own case, working with someone who understands the intersection of family law and property characterization is key. It’s not just about who paid what—it’s about when, how, and what the law says about those payments.