Watt’s Charges

During marriage, all property (real or personal) acquired or debt incurred is considered community property (Cal. Fam. Code §760) except for assets (and any encumbrance(s) on such asset) received by gift or inheritance (Cal. Fam. Code §770). Thus, each spouse typically has a one-half interest in a house that is purchased during the marriage and are responsible for one-half of the mortgage on the house.

WHAT TO EXPECT

This interest also extends to one-half of the interest of rents that could be collected from a home. For example, On December 31, Wife found text messages and pictures of Husband cheating on her. She confronted him and they decided their marriage was done. After sleeping on the couch that night, Husband moved out of the community property home the following morning and in with his parents. Then, he files for divorce.

The divorce case takes eight months to get to trial. Meanwhile, Wife has continued to live in the community property home without an agreement for her to do so. For the past eight months, Wife has paid the mortgage of the home in the amount of $2,000 per month. However, the home has a rental value of $3,200 per month.

Watt’s Charges is a “charge” against a spouse for one-half of the community asset’s use after the date of separation. Here, the date of separation is January 1 and Wife used the home for eight months. The rental value of the home is $3,200 per month; however, Wife paid $2,000 per month for the mortgage. Thus, there is a difference of $1,200 that the community could have been earning each month for eight months if not for Wife’s sole use of the home. Thus, the community could have earned $9,600 for which Husband would have a one-half interest.

However, unlike Epstein Credits, Watt’s Charges are discretionary in that a Judge has wide discretion to make a ruling that is fair and equitable when dividing the community assets. It is up to the parties or their attorneys to argue for or against such charges.

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