Can I Get Back My Down Payment?

If you bought a home in San Jose, it probably came at a hefty price.  The down payment may come from the money you and your spouse saved together, the money one of you or both of you saved before you got married, or the money you or your spouse received as a gift from family. Or, the down payment may be the money you saved together plus your pre-marriage savings or gifts from family. There are a lot of scenarios. This is when a San Jose divorce lawyer deals reimbursement issues. If you dipped into the savings account you had before you got married to buy a home with your spouse, can you get your money back after your home is sold as part of your divorce?

Family Code 2640 addresses reimbursement of a separate property down payment. Family Code section 2640(a) states: “(a) “Contributions to the acquisition of property,” as used in this section, include down payments, payments for improvements, and payments that reduce the principal of a loan used to finance the purchase or improvement of the property but do not include payments of interest on the loan or payments made for maintenance, insurance, or taxation of the property.”

First, tell your San Jose divorce lawyer how much was the total down payment. Second, identify the source from which your separate funds came, whether it is the savings account you had before you got married, investments you had before you got married, sale of property you owned before you got married, or a gift from a family member. Third, give your San Jose divorce lawyer the proof that part of the down payment came from a separate source. Show bank statements from your account that you had before you got married which prove the money was transferred to make a down payment.  Or, show proof of a check or a bank transfer by a family member into your account together with proof that this money was used for a down payment. The person who gave you the money can also sign a declaration under penalty of perjury that he/she gave you a gift. However, showing bank statements is always best to trace the source of the money you used as a down payment.

The money you had in your account before marriage, the money that you got when you sold property you owned before marriage, and money you got as a gift is your separate property. If you can prove that you contributed your separate property funds toward the down payment for a community property home, you can get these funds reimbursed to you when the home is sold.  For example, you bought the home for $400,000.  The home is sold for $600,000.  The mortgage is $300,000.  Your parents gave you $50,000, which you used as a down payment. After the loan is paid off, you have $300,000 left.  You get reimbursed $50,000. The remaining $250,000 is community property that is divided 50/50.  You and your spouse get $125,000.

While reimbursement claims may seem straight forward, they are not.  There are many factors that affect whether you can make a Family Code 2640 claim.  The reimbursement claims are most common when it comes to a house in a San Jose divorce.  Family Code section 2640 can apply to other property too. If you bought a home with your spouse and used your separate property funds for a down payment, I encourage you to consult my office for a full analysis.

Written by Ekaterina Berman, a San Jose divorce and family immigration lawyer.  My goal is to provide experienced and caring representation in family law matters to every client.