If you are separating, one of the first decisions you will make is who gets to stay in the house. Regardless of whether your husband left you to live with his new girlfriend or whether you are staying because it is best for the kids, using the marital home as your residence can have financial consequences. Before you finalize your housing arrangements, talk to a San Francisco divorce attorney about Watts charges and Epstein credits.
Watts charges and Epstein credits come from two landmark cases that are used as a precedent in nearly every California divorce case.
In 1985, the court determined that a spouse who uses community property after the date of separation may be ordered pay the other spouse a fee for using the property. This means that you may have to pay rent to your husband in order to live in your home. He may request up to half the rental value of your property. If your home’s rental value is higher than your mortgage, you could lose money by staying in your home.
In 1979, the court determined that a spouse who pays a community debt is owed a credit on the payment. If you pay 100 percent of the mortgage, your spouse owes you an amount equal to half the payment. If your spouse pays the mortgage, you owe him half the payment. Epstein credits do not apply if the payment is made out of a shared bank account.
Epstein credits and Watts charges are applied to the divorce settlement. If you are staying in your home and your spouse is paying the mortgage, your divorce settlement may be significantly reduced by Watts charges and Epstein credits.
What can you do? You and your spouse can sign a temporary settlement agreement that includes either your mortgage payments or your stay in the home during the separation as support. When staying in the home is granted as support, no Watts charges or Epstein credits are given.
Epstein credits and Watts payments are discretionary. This means they are not automatically awarded. California family courts must consider each spouse’s income, the number of children in the home, and other factors before ordering Epstein credits and Watts charges.
Confused? Our San Francisco divorce lawyers can help you protect your family and your interests during your separation and divorce. To schedule an appointment, contact The Law Offices of Paul H. Nathan at 415-341-1144.