Loan Secured By Separate Real Property Is Separate

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An unpublished opinion out of Marin County gives us a nice refresher on characterization of a second mortgage taken against a spouse’s separate real property.

Vincent owned a home in Petaluma.  It was his separate property because he owned it before his marriage to Michelle. During marriage the parties took out a second mortgage with Bank of America, secured by the separate property home Petaluma.  Vincent argues that this is a community obligation because Michelle signed the deed of trust. The court ruled that notwithstanding Michelle’s signature on the deed of trust, the Bank of America loan was Vincent’s separate obligation because it was secured by his separate property home.  Thus, the proceeds of the loan were Vincent’s separate property. If Vincent spent those loan proceeds for community purposes during marriage, he has no right to reimbursement from the community for such expenditures. (Family Code, §§ 770, 850; Marriage of Lucas (1980) 27 Cal.3d 808, 816.)

Please click here to read the original Montalban opinion.

Please be sure to visit, the website for the law firm of Harding & Associates, for more information on California family law.

#communityproperty #loanproceeds #divorce #johnharding #harding&associates

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