California is a community property state, meaning assets and debts incurred during the marriage belong to both spouses equally.
Dividing community property can be complex. Consider how the state defines and divides marital property.
Community vs. separate debts
The first step in dividing is to define whether it is separate or community debt. Any debts incurred prior to the marriage by either spouse are separate, belonging only to that spouse. Community debt includes any debts incurred by either spouse throughout the marriage. For example, if one spouse opened a credit card in their name and used it to purchase necessities for the children during the marriage, both spouses would be equally liable that balance.
In a simple scenario, both spouses would contribute to the mortgage of their marital home through community funds, making them equally responsible for the mortgage and entitled to an equal share of the net sale amount. Sometimes, one spouse may buy the other to give them 100% ownership.
Post-separation mortgage payments
If one spouse uses separate funds to pay community debt during separation, the court can order the other spouse to reimburse them. For example, if one spouse moves out pre-divorce but continues to pay a portion of the mortgage, the other spouse may have to repay that amount.
The court may also order a spouse who uses the family home exclusively during separation to pay “Watts charges.” This is essentially the fair rental value of the home during that time.
If both parties are in agreement prior to divorcing, the process is often simpler.