A married couple in California takes title to a rental property as community property. One spouse contributes $100,000 from pre-marriage savings as a down payment; the remaining $400,000 mortgage is paid entirely from wages earned during the marriage. If the couple later divorces, how will a California court MOST likely classify the property?

Correct Answer

C) Entirely community property, with the contributing spouse entitled to reimbursement of the $100,000 separate property contribution before any equal division

When spouses take title expressly as community property, that characterization governs. California Family Code §2640 provides that a spouse who contributes separate property funds toward the acquisition of community property is entitled to reimbursement of that contribution (without interest) before the remaining community property equity is divided equally. Because the couple deliberately vested title as community property and the ongoing mortgage was paid with community funds (wages earned during marriage under Family Code §760), the property is community property — but the contributing spouse has a §2640 reimbursement right for the $100,000 separate property down payment.