Commonly, a mortgage on a family home is partially paid down during the course of a marriage. Often, the source of the payments on the mortgage is not entirely clear. There is a community property interest in the real estate in the proportion to which community funds were used to pay down the mortgage. Furthermore, if the down payment was made using separate property, the spouse whose separate property was used for the down payment is entitled to be reimbursed for the amount of the down payment, but "without interest or adjustment for change in monetary values. . ." (Family Codež2640(b)) (emphasis supplied). In the event property is refinanced which is comprised in part with separate property, the separate property may be reimbursed by applying the ratio that the separate property contribution bears to the loan proceeds and "tracing" the proportionate separate property contributions to the assets that were acquired with the loan proceeds (Marriage of Walrath (1998) 17 Cal.4th 907, 952 P.2d 1124, 72 Cal. Rptr.2d 856). "Tracing" is allowed in most situations in order to reimburse a spouse for his or her separate property contributions to community property.
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