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Increase in a Parent’s Home Equity is Not Income For the Purpose of Calculating Child Support

Husband and wife divorced. In October 2000 wife was ordered to pay child support to husband for their two teenage children. Wife then became pregnant in December 2002 and experienced complications that disabled her from work. As a result she sought to modify the prior child support order due to the decrease in her income. Wife’s complications continued even after giving birth. She continued to receive disability payments and then went on unemployment.  The court then increased her child support obligation after determining that wife’s house had increased in value.

The main issue is whether the trial court correctly calculated her child support payments. Specifically, was it proper for the court to consider wife’s share in the increased equity in the family home to be income? Income is broadly defined when used to calculate child support. Family Code section 4058 states that income includes salaries, commissions, royalties, wages, rents, bonuses, disability and insurance benefits.

The divorce court agreed with husband’s Orange County divorce lawyer and found that the increase in wife’s home value was income under section 4058. However the appellate court sided with wife’s Orange County divorce attorney found no case which held that an increase in a parent’s home equity value constitutes income for the purpose of calculating child support. Language in section 4058 specifically does not include increase in equity, so that a parent is not forced to sell or refinance the home to make support payments. Thus, the home equity income was not sufficient to warrant affirming the court order that increased wife’s child support obligation. The divorce court did not base its finding on wife’s earning capacity, but instead on the value increase of her home. Thus per section 4058 the divorce court did not include necessary findings to support an earning capacity calculation. The divorce court should have used wife’s actual income to calculate her child support obligation. Such income would include wages, disability benefits, and unemployment benefits.

The Court of Appeal reversed the divorce court’s order increase. It found that the order was not supported by substantial evidence. It also remanded for the divorce court to recalculate the correct obligation amount, to be based upon wages, disability benefits, and unemployment benefits. The Court of Appeal ruled in wife’s Orange County divorce lawyer’s favor & found that the increased value of wife’s house was not to be considered.

In re Marriage of Henry (2005) 126 Cal.App.4th 111