If you and your spouse own a home and are in the process of divorce, the California courts may apply Watts charges against the spouse living in the home during the divorce process. “Watts charges” is a term coined after the 1985 Marriage of Watts case. The spouse living in the home after the couple separate can be required to reimburse the community for exclusive use of the community asset.
In order for the spouse (who does not live in the home) to seek Watts charges, they must give prior written notice to the other spouse of the intent to seek this charge for the spouse’s use of the community asset. There is a determination by the court (by way of testimony and evidence) of the fair rental value of the home. When the Watts rule applies, the court is required to order reimbursement to the community or provide an explanation for not doing so.
A party has to request for the court to determine whether the community is entitled to reimbursement for the exclusive use of the family home by the other party. The court does not take the initiative to address this on its own.
As if this concept is not confusing enough, there are other potential reimbursements involving the family home. Check back soon for some information regarding Epstein credits.
Article written by Miruna Lujan, Associate Attorney at Moore Family Law Group.