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FAMILY LAW ARTICLES

July 24, 2020
Reimbursed for Contributions to An Improvement of Real Property

The home is often the most significant asset that couples have to address in a divorce proceeding. If you have owned the house for any length of time, you may have also contributed a significant amount of money for upgrades, improvements, and maintenance. If you separate, can you be reimbursed for contributions to an improvement of real property?

Reimbursement for Contributions

Whether an improvement can be reimbursed depends on several factors. For example, there can be writing that waives any rights and where the funds originated. 

California is a community property state. In general, when you contribute funds to a home in a community property state, you can receive some reimbursement or extra consideration for those funds. 

However, the money that went into the home must have been considered separate before it was used for improvements. Separate property is anything that you already predetermined to be separate based on a prenuptial agreement. It can also be the result of an inheritance or gift to just one spouse. 

In addition, if you are contributing money that you and your spouse agreed in writing not to keep separate, you likely will not be reimbursed for that. The report will generally be part of a prenuptial agreement, but not always. 

However, keep in mind that if one member of a couple has separate property and uses community property funds to improve that property, they cannot keep the value of that improvement to themselves. It will be included in the community property of the marital estate. 

Defining Improvements

When you put money into a house, that money often goes toward things that need to be fixed or maintained. For example, installing a new roof on the home might be considered an improvement for many people. However, from a legal perspective, it is a maintenance item. As a result, any money that you used to install the new roof is likely not recoverable. 

The same applies to replacing any more significant appliance or equipment, like a water heater or refrigerator. Even if the addition is an upgrade, it likely will not be considered an improvement if you are changing something that needed replacement.

Examples of items that might be an improvement include:

  • Additions to the home
  • Adding significant landscaping
  • Installing a pool, basketball court, or another sizeable outdoor improvement
  • Upgrading the kitchen or bathroom

In general, utilizing the money to increase the home’s value is more likely to be considered an improvement. 

The dollar value of the improvement will have a significant impact on how it is treated. 

Contact our team to set up an appointment to learn more about how improvements to real property will be treated in a divorce.

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