All property division pursuant to a divorce in Washington state starts from the simple premise that all assets accumulated during the marriage will be presumed to be “community property” and split 50/50. But in practice the 50/50 split often does not end up being the result because of such legally cognizable factors as: the earning power of the parties upon termination of the marriage is highly unequal, one party made the entire down-payment, the property came by inheritance, and quite a few others. Often time this arises in shorter marriages where the parties have acquired a piece of real-estate. So how does one answer this question?
The mortgage rule is a legal tool used to characterize property acquired, using both community and separate funds, over a period of time. Harry M. Cross, The Community Property Law in Washington, 61 WASH. L. REV. 13, 39-49 (rev. 1985). The mortgage rule examines whether both parties concerned were obligated to make payments in order to retain ownership of the disputed asset. If there was no such continuing obligation, then the character of the asset is retrospectively determined to be proportionate to the ratio of separate and/or community funds used to acquire the asset. Absent a continuing obligation, the character of the property is retrospectively determined to be proportionate to the ratio of separate and or community funds used to acquire the property It is precisely this mortgage indebtedness that itself constitutes a contribution to effect the final determination of what proportionate share either party should be entitled to. If the other spouse signs the promissory note they become liable to the bank and later third parties for repayment. Even if that party had low income and no assets to secure the loan it is still a contribution. If separate funds are used to make a contribution and are traceable a lien for the down-payment amount could be found but only to that extent of that separate contribution to the down payment. However, In Re Hurd changes this slightly in that the separate character of a cash down payment can be transformed into community property by titling the home in both parties names. (Thus we see some significance in whose name an item of property actually stands.)
This includes such assets as the appreciation of retirement plans that were purchased before the marriage. The value of such an asset must be analyzed to determine what portion grew or accumulated during the marriage and the value prior to the marriage.
Washington state divorce law purposefully vests a substantial degree of leeway to the Judges hearing your case (and I say Judges because the Commissioners only deal with pre-trial issues, modifications, and contempt; they can’t divide the equity in your home or business). Carefully planning from the start of your case is necessary to develop the evidence needed in property characterization. It also gives the attorney time to become familiar with what both parties real financial futures might look like upon final dissolution of the partnership. This is especially important where one is not dealing with a trivial amount of assets, or if you feel your spouse has a significantly higher earning potential.
Division of real estate under Washington state divorce law can also be made not in accordance with whose name is on the title to the property. Whose name the property concord condo seattle is titled in, does not settle the matter conclusively but may be considered by the judge among other factors as possible indicia that the parties wished to make it separate.