question about Moore Marsden rule

[zoula]

What is the name of your state? California
I have been researching the Moore Marsden rule and would like to know how it applies to rental property. I had the property prior to the marriage and it has always been cash flow positive. The rents were about 1/3 of our family income. The rent money went into our community accounts and was co-mingled. We never lived in any of the properties and owned a separate home together. A few times the community paid for repairs etc...; I have all the documents and can show that the income flow to the community far exceeded any costs born by the community during our 12 year marriage. My husband is claiming a Moore Marsden partial ownership of the property which is all in my name. I am saying that at most I should reimburse the community for all expenses and that since the properties were cash flow positive and there is no right to a partial ownership. Anyway, I am wondering if anyone has dealt with this specific issue and what advice you would have for me. Thanks! What is the name of your state?

 

[LdiJ]

What is the name of your state? California
I have been researching the Moore Marsden rule and would like to know how it applies to rental property. I had the property prior to the marriage and it has always been cash flow positive. The rents were about 1/3 of our family income. The rent money went into our community accounts and was co-mingled. We never lived in any of the properties and owned a separate home together. A few times the community paid for repairs etc...; I have all the documents and can show that the income flow to the community far exceeded any costs born by the community during our 12 year marriage. My husband is claiming a Moore Marsden partial ownership of the property which is all in my name. I am saying that at most I should reimburse the community for all expenses and that since the properties were cash flow positive and there is no right to a partial ownership. Anyway, I am wondering if anyone has dealt with this specific issue and what advice you would have for me. Thanks! What is the name of your state?

I think that you really need to be talking to a local attorney. He may have a claim on any equity that accrued during the marriage, or the property may be considered your separate property. I think you need a local attorney to protect your interests.

 

[tranquility]

I agree with LdiJ. You have a complex situation with substantial co-mingling involved. While I don't believe moore-marsden is the proper set of cases, you have two problems. The first is the use of community property to support the seperate. Although you claim you can trace it, I don't think you can from the discription. The second is the Perreira/Van Camp cases. The community is going to get something from the property, and it certainly deserves some value from the work you put in. With the combination of the co-mingling problem and the choice of law to impliment it, it is unclear of the value which would flow to the community without a close review of the facts. Even then there is some argument as to which formula to use for the situation.

Bottom line, you need an attorney. While moore/marsden is probably not the reason, it is entirely possible the same result can occur from other cases.

 

[zoula]

Thanks for the replies!

I want to add that all the properties were managed by professional property management throughout our marriage. Even when I lived in the property as a single woman I employed property management b/c I did not want to deal with tenents. Neither one of us worked on the properties and the community does not need to be compensated for my time - in fact I worked a full time job in another state where we resided. I do have a good divorce attorney, found her through the local Bar Assoc. and am very happy with her - except she doesn't seem to know about this. I also do have very good records, partly b/c we have always employed a management company and I can account for all monies the community spent on the properties as well as all income that flowed to the community from the properties. I will be researching it myself in the local law library but I don't what exact cases I should be looking at. My husband's attorney has used the term "Moore-Marsden" but I'm not sure if that applies.
Also - as a lay person (trained as a mechanical engineer) who knows nothing about the law, I assume that all laws are based on some concept of justice or fairness. I understand the fairness of compensating the community for all monies or time spent by the community for the benefit of the separate property - it just makes logical sense to me. What I don't understand is when the separate property paid far more into the community than it ever took from the community, then why is the community owed anything more than a simple reimbursement? Why does the community have the 'right' to a partial ownership claim?
If I owned a profitable business that helped support the community throughout the marriage then would the community automatically own a fractional share of the business in the event of the divorce? If the profits from the business are deposited into a community account and thus "intermingled" is the community then entitled to a fractional ownership? I appreciate the responses so far and will add the cases you mentioned to my research list and would very much like to hear any other thoughts on this. Thanks!

 

[tranquility]

There is a presumption of community property. Keeping things separate is a task which requires close recordkeeping and discipline. You did not keep things seperate.

The legislature and the courts through the years and in decisions have developed a certain scheme of financial interaction between spouses. In their infinite wisdom they have looked to the vast complexity of similar facts and found that, in instances like yours, the community has the rights to some portion of the equity of formerly separate property. The community does not make a gift to separate without specific written documents, although a person can always make a gift of separate property to the community. In fact, as I wrote, anytime you mingle the two types there is a presumption(rebuttable) that a gift was intended.

You may not think that is fair or just, but having been on the outside of many such situations, I think it is in general. Sometimes it isn't. There are avenues to explore when that is the case. If it were so important to keep the property separate, you should have behaved differently. You should have behaved in a manner which communicated to your spouse and the world that that property was *yours* and not *ours*. You did not do so. Don't blame the legal system for your error.

That does not mean all is lost. That you performed little work--if any-- is in your favor from the Perreira/Van Camp cases and their prodgeny. Community property law is *extremely* fact sensitive. Tracing issues can often be argued, as can intent of the parties to individual transactions.

However, if "I will be researching it myself in the local law library but I don't what exact cases I should be looking at" you have big problems as legal research is more than looking up cases. As a hint, go to the internet and find summaries of important cases in areas you (better still, your attorney) finds to be the issue. These will be the core or "parent" cases which changed the law. This will not be the law! You will need to read the case and see how it changed the law. What was important to the court? What were the policy implications? Once you throughly understand that, then use the case cite to find more modern cases which refer to the parent case and which use the test or holding from that case in thier decision. Go through many cases and get a feel for how the courts apply the particular facts to their holding. As you move along filter out those which have similar facts to your own and put them to the side. Then go to the cases with similar facts and try to pull out those with similar issues in order to find out the potential holding in your case. In every applicable case, look to each of the cases cited therein and see how that applies to your facts. Closely read those which concern your issue(s). You don't need to do more than scan those which don't apply.

Many of those steps are done in law school. Looking for a case which fits your facts is a waste of time until you take those steps. Pulling up cases and showing them to your attorney will do nothing more than increase your bill and/or annoy the attorney. I swear. You must start at the trunk and work out--you cannot look at the leaves until later.

 

[LdiJ]

I want to add that all the properties were managed by professional property management throughout our marriage. Even when I lived in the property as a single woman I employed property management b/c I did not want to deal with tenents. Neither one of us worked on the properties and the community does not need to be compensated for my time - in fact I worked a full time job in another state where we resided. I do have a good divorce attorney, found her through the local Bar Assoc. and am very happy with her - except she doesn't seem to know about this. I also do have very good records, partly b/c we have always employed a management company and I can account for all monies the community spent on the properties as well as all income that flowed to the community from the properties. I will be researching it myself in the local law library but I don't what exact cases I should be looking at. My husband's attorney has used the term "Moore-Marsden" but I'm not sure if that applies.
Also - as a lay person (trained as a mechanical engineer) who knows nothing about the law, I assume that all laws are based on some concept of justice or fairness. I understand the fairness of compensating the community for all monies or time spent by the community for the benefit of the separate property - it just makes logical sense to me. What I don't understand is when the separate property paid far more into the community than it ever took from the community, then why is the community owed anything more than a simple reimbursement? Why does the community have the 'right' to a partial ownership claim?
If I owned a profitable business that helped support the community throughout the marriage then would the community automatically own a fractional share of the business in the event of the divorce? If the profits from the business are deposited into a community account and thus "intermingled" is the community then entitled to a fractional ownership? I appreciate the responses so far and will add the cases you mentioned to my research list and would very much like to hear any other thoughts on this. Thanks!

I do understand your point, and a good attorney may be able to make an argument to the judge based on your points.

However, what you are dealing with is the whole "essence" of community property. Both the profits of, and the expenses of the property ran through your joint bank account. That is a problem.

Had you kept and paid for expenses out of a separate account, in your name only, your position could have been stronger.

If your attorney seems clueless, then your attorney needs to be doing some serious research, or you need another attorney.