What To Know About Epstein Credits and Watts Charges

Posted by: Gerald A. Maggio, Esq.

Best Orange County divorce attorneys; The Maggio Law FirmIf you are a married couple that has decided to apply for a divorce in California, then one of the first major decisions you need to take is to determine who gets to stay in the house after the divorce. It does not matter whether your husband leaves you to stay with his new partner or if you decide to stay back in the interest of your kids. Staying at the marital home after the divorce comes with its own set of financial consequences. Epstein credits and Watts charges come from a couple of cases that are now commonly used as a precedent in almost every other California divorce case:

  • Epstein Credits – In 1979, the California Supreme court decided that if a spouse pays a community debt, then he/she is owed credit on that payment. For instance, if you pay the mortgage, then your spouse is obligated to pay 50 percent of it after the divorce and vice versa. But, there’s a catch. Epstein credits don’t apply if the payments are made out of a bank account shared by both the spouses.
  • Watts Charges – In 1985, the California Supreme court decided that if a spouse uses community property after separation, then he/she might be ordered to pay his/her share of the fee for using it. For instance, if your husband leaves the property and you continue to live there with your credits, then you might have to pay rent to your husband if you want to keep using it. He has the right to request for up to half of the rental value of your property. The key thing to take into consideration here is that if the rent is higher than the mortgage, then you will end up losing money if you continue to stay there after the divorce.

Both Watts Charges and Epstein Credits can be directly applied in the divorce settlement. If your spouse pays the mortgage and you stay in the home, the settlement amount will be significantly reduced by Epstein Credits and Watts Charges. You and your spouse can go for a temporary settlement that includes either your side of the mortgage payments or your stay in the property during the divorce as support. If the court allows you to stay in the property as support, you will not be given any Epstein Credits or Watts Charges.  The courts can consider the income of each spouse, the number of children, and other factors before they award them.  These credits and charges can be complicated to determine, so you should seek the advice of legal counsel for further explanation and assistance.

Getting divorced in California can be complicated.  Download our free eBook, 18 Important Things to Know About California Divorce to educate yourself on the process.  

 
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