Community or individual property? Be aware of mortgage rules. JD Supra

Not knowing about mortgages can hurt you. In Washington, we are not a “title state.” Therefore, listing your spouse’s name on another property title does not automatically make it community property. But be careful. The outcome could be dramatically different if your spouse approved a mortgage liability related to another property of yours.

Before determining the division of property in the event of a divorce or legal separation, “the court must first characterize the marital property as one of the following: community Also Divide[1] Assets are characterized at the time ownership or title is acquired based on the nature of the funds or credit Used to buy it.[2] Property acquired and owned before marriage is usually separate property, and property acquired during marriage (unless gifted or inherited) is usually communal.[3] A property retains its individual or collective character unless that character is changed.[4]

It is common for the parties to own the property before marriage, and the couple also acquires the property through a combination of separate funds and community credit (i.e., mortgages or bank loans incurred during the marriage). Similarly, married couples often refinance separate real estate loans to cash out assets or get more favorable interest rates during the marriage. Even if the parties owned another mortgage before the marriage, refinancing that loan during the marriage may change the character of the property.

Asset ownership is determined by the nature of the funds and credit used to acquire the asset. For example, if an asset is valued at $100,000, of which $25,000 is paid in another fund and $75,000 is rented by a spouse, the asset is owned 25% by another property and 75% by community property. To do. This is known as the “mortgage rule” and is the legal tool employed by Washington courts to determine the nature of property acquired for both communal and individual interest. This rule examines whether both parties were obliged to make mortgage payments in order to retain title to the property.

In the absence of ongoing obligations, the nature of the property will be determined based on the proportion of individual and/or community funds used to acquire the property.[5] When a community pledges community credit, the property acquired for that credit is typically the community. If the originally segregated mortgage is refinanced and the pledged credit to retain ownership becomes the community, the community gets interest on the pledged amount and/or percentage. In short, if you intend to keep your property separate during the marriage, you can ensure that the property maintains its separate character by taking care to commit community goodwill to acquire or hold the property. .

For questions regarding this, or any other matter regarding your dissolution or joint divorce, Family Law Practice Group Lasher is here to help.

[1] About the Griswold Marriage, 112 Wn. app. 333, 339, 48 P.3d 1018 (Div. III, 2002).

[2] About Skarbek’s Marriage, 100 Wn. app. 444, 450, 997 P.2d 447 (Div. III, 2000).

[3] RCW26.16.010 When RCW 16.16.030.

[4] in Madsen’s territory48 Wn.2d 675, 677, 296 P.2d 518 (1956).

[5] About Zahm’s Marriage138 Wn.2d 213, 978 P.2d 498 (1999).

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