Concept: Moore/Marsden

Citation: In re Marriage of Moore (1980) 28 Cal.3d 366, 168 Cal.Rptr. 662, 618 P.2d 208; In re Marriage of Marsden (1982) 130 Cal.App.3d 426, 181 Cal.Rptr. 910.

Explanation: The Moore/Marsden concept is a California family law doctrine that determines the community property interest in a home or other real estate that was initially one spouse’s separate property. It comes from two landmark cases (Moore in 1980 and Marsden in 1982) which established a formula to fairly apportion equity when community funds (earnings during marriage) are used to pay down the mortgage of a separately owned property. In essence, if one spouse owned a property before marriage (or acquired it separately), but during the marriage the couple used community funds to reduce the principal balance of the loan or to improve the property, the community (both spouses) gains a proportionate ownership interest in the property’s appreciation. Importantly, the calculation only credits payments that reduce the principal debt (not interest, taxes, or maintenance) because only principal payments build equity in the property. This rule ensures that both the separate property contributor and the community are allocated a fair share of the equity and any increase in value, in proportion to their respective contributions.

Examples: Suppose a spouse bought a house for $100,000 before marriage, paying a $20,000 down payment (separate property) and financing $80,000. At the time of marriage, the remaining mortgage balance is $80,000. During the marriage, the couple uses community funds to pay down the mortgage principal by $30,000, leaving a $50,000 balance at separation. Assume the house’s market value was $120,000 at marriage and $200,000 at separation, so it appreciated by $80,000 during the marriage. Under the Moore/Marsden analysis, the community has contributed 30% of the purchase price ($30,000 of principal towards the $100,000 price). The community is therefore entitled to 30% of the $80,000 appreciation (i.e. $24,000). In addition, the community is credited with the $30,000 of principal it paid. Thus, the community property interest in the house would be $54,000 (which would then typically be divided between the spouses in a divorce). The remaining equity is the separate property of the original owner spouse. This example illustrates how Moore/Marsden is used in practice: it allocates a fair share of the home’s equity increase to the community based on community contributions. The Moore/Marsden concept commonly applies to any separate real estate (like a house or even a commercial property) where mortgage payments during marriage came from community funds.

Cases:

• In re Marriage of Moore (1980) 28 Cal.3d 366 – This California Supreme Court case established the foundational formula for apportioning equity in a house purchased before marriage. The court held that when community funds are used to pay down the principal of a pre-marriage loan, the community acquires a pro tanto interest in the property proportional to its contributions. In Moore, the community’s share of the home’s equity was calculated based on the ratio of community-paid principal to the total purchase price, giving the community a corresponding percentage of the home’s appreciation during the marriage.
• In re Marriage of Marsden (1982) 130 Cal.App.3d 426 – This Court of Appeal decision applied and clarified the Moore formula. Marsden involved a house the husband owned before marriage, with community funds later reducing the mortgage. The court followed Moore’s method, confirming that only the principal reduction creates a community interest. In Marsden, after doing the calculation, the court determined the exact percentage of community versus separate interest in the property and awarded the wife her share of the community portion of the home’s increased equity.
• In re Marriage of Frick (1986) 181 Cal.App.3d 997 – This case extended the Moore/Marsden principles to a commercial property (a hotel business property) that one spouse owned separately before marriage. The community paid expenses and mortgage after marriage, so the court apportioned the increase in the property’s value between separate and community interests using a Marsden calculation. The result in Frick was that the community was awarded a sizeable share of the appreciation of the separate property (over $600,000 of community interest) because community funds had been used to pay down the loan and enhance the property’s value. Frick confirmed that the Moore/Marsden formula isn’t limited to houses; it applies to any real property where community funds contribute to equity, ensuring an equitable division.

Formula: The Moore/Marsden formula can be summarized as follows – Calculate the fraction of the purchase price paid by community funds (by dividing the total principal paid with community funds by the original purchase price of the property). This fraction represents the community’s percentage interest in the property’s equity. Next, determine the property’s appreciation during the marriage (increase in value from the date of marriage to the date of separation). Multiply the community’s percentage interest by this appreciation to find the community’s share of the appreciation. Finally, add the amount of principal actually paid with community funds to that share of appreciation. The sum is the total community property interest in the property. In equation form: Total Community Interest = (Community Principal Paid ÷ Purchase Price) × (Appreciation During Marriage) + Community Principal Paid. This formula ensures the community recovers its contributions to principal and receives a fair portion of the increase in value, while the spouse’s separate property share retains the benefit of their premarital contributions and the remaining appreciation.