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Family Code 2640 and Down Payments on Marital Property

| Apr 30, 2015 | Property Division

The world of law, even in family law court, is filled with complex legal terminologies and sections that have effect on the overall outcome of a whole host of cases. Family Code section 2640 is no different. When it comes to California divorce cases, Family Code section 2640 is used in several litigation proceedings.  Section 2640 is broad and applicable in wide variety of situations and the most common of these is the reimbursement of a separate property down payment on a home. For example, a down payment is made on a home which is purchased during the marriage. The source of the down payment money from one of the spouses is from a separate property source. When one spouse files for divorce, then what happens to the amount of down payment that was paid for by money from a separate source? Will the spouse who made this payment get their money back? How does the process work? The answer to all these questions is what Section 2640 deals with.

Property and Reimbursement Claims Under Family Code 2640

Section 2640 is one of the most detailed sections of the California Family Code which deals with all aspects of financial recovery of the down payments on marital real property and other aspects involved, done from separate source. The section in its wordings is clear with respects to the parameters of its authority and  states what parties involved should do or should not do. It is however important to understand that as far as the statute is concerned, unless it is written in black and white about what it means and what it does not, it is the judge’s discretion to interpret it as they see it fit.

The 3 Step Process to Recover the Separate Property Down Payment

There are three ways that a spouse in the process of divorce litigation will be able to recover the amount of down payment that had come from a separate property source using Section 2640:

  1. Identifying the amount of the down payment that was made using the separate property source. Only then you will be able identify the amount that has come from a separate source, which has been used in down payment, and will be able to start the process of recovering it.
  2. The separate source that the money came from should be clearly a separate source with no dispute or claim of ownership by the other party on it. Typically, a clear and clean separate source is likely to fund from the sale of property that had been in the possession of the spouse prior to the marriage that was kept in the bank. Even gifts from third parties that are given directly to one of the spouse come in the category of clear separate property source.
  3. The evidence needs to be drawn which proves the exact amount of money with the separate source of finance used. Proofs of transactions are likely to hold significance in this regard.

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