In a proceeding for the dissolution of marriage or legal separation, there is an opportunity for reimbursement to the community when one of the parties has the sole and exclusive use of an asset while the matter is pending and until a division of the asset is finalized. The reimbursement would be for the reasonable value of the usage. The asset is typically a residence, but can also be a car or other asset. This reimbursement is often referred to as a “right of reimbursement,” but that is a misnomer because the reimbursement is discretionary to the Court. The reimbursement issue derives its name from an appellate decision set forth in re Marriage of Watts, (1985) 171 Cal. App. 3d 366.
The Court has the discretion to consider the totality of the circumstances when determining whether it will or will not order a party to reimburse for Watts charges (aka usage charges). For instance, a typical scenario may involve a husband that voluntarily vacates the family home in order to move in with his girlfriend, leaving his wife and kids to stay in the family home until the divorce is final. His reasons for allowing wife and kids to remain the home may be noble, i.e., not wanting to disrupt the children any further as they transition through the divorce. Let’s say the house is a million dollar house, which would easily rent for $6,000 a month. There is no mortgage on the house. However, after twelve months of bitter litigation with wife, husband may decide he wants to seek retribution by claiming Watts charges on the house for $6,000 per month (rental value) for 12 months (duration of exclusive use), for a total reimbursement claim of $72,000!
There are several factors that the Court would consider when deciding whether to award husband the Watts charges. Factors such as husband’s voluntary vacating of home, the fact that there are children, the reasons for the living arrangements, the relative financial circumstances, the zero mortgage, the division of assets, the amount of support husband was paying, whether wife had advance notice of husband’s intention to seek Watts charges, and whether there was domestic violence, would all be considered by the court.