What to do with the family house is one of the most common questions in California divorce cases. There are also a number of related issues to consider, including what to do when one spouse stays in the home after a couple splits but before they resolve how the property will be divided. As the state’s Third District Court of Appeals recently explained, the spouse who stays in the house might be responsible to pay fair market rent, and the spouse who leaves could be on the hook for mortgage and maintenance obligations.
Husband filed for divorce from Wife in Hawaii in 2005, and Wife filed a separate divorce action in California the following year. The couple had originally lived in Elk Grove, but they physically separated when Husband was moved around the country as part of his military service. Wife continued to live in their Elk Grove home after they officially separated in 2004. The Hawaii case was eventually dismissed, and the spouses entered into an agreement awarding the Elk Grove home to Wife in 2012.
The former couple asked a court to decide, however, whether Wife should be required to pay one-half of the house’s fair market rent (“Watts charges”) to Husband for the eight or so years that she lived there after they separated and before they entered into the agreement. It also asked the judge to determine whether Husband should reimburse Wife for half of the $72,000 that Wife said she sunk into the property in mortgage payments, maintenance, and repairs during the same time (“Epstein charges”). The judge ordered Husband to compensate Wife for the mortgage, maintenance, and repairs, but denied Husband’s request for rental value reimbursement.
The Third District disagreed on appeal, to some extent. The Court said Husband was generally entitled to Watts charges for the fair rental market value. “[A] spouse who has exclusive use of community property such as a house after the parties have separated must reimburse the community for the use of the residence,” the Court explained. It nevertheless said that some of those costs should be offset by the costs that Wife incurred in defending the case in Hawaii. The Court said that the litigation was groundless and that Husband should have known that the Hawaii court wouldn’t have jurisdiction because the couple never lived there together.
The Court reached a similar decision on the Epstein charges. It said Wife was entitled to be reimbursed for the money she spent on mortgage payments, maintenance, and repairs, but only during the time in which Wife owed money for the home’s rental value. “If the community is to reap the fair rental value of the marital residence it must also bear these burdens of asset preservation shouldered solely by [Wife],” the Court said.
Property division is just one of the many complicated issues that can come up in a California divorce case. If you’re considering a divorce or are grappling with community property and other issues in California, contact San Jose divorce attorney John S. Yohanan. With more than 30 years of experience, Mr. Yohanan is an accomplished family law attorney who has helped a number of clients resolve a wide variety of marital disputes. Call our office at (408) 297-0700 or contact us online to schedule a consultation.
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