After spouses separate, one spouse may continue using a community asset while the other no longer receives the benefit of that property. The most common example is a family residence occupied exclusively by one spouse while the California divorce remains pending. In appropriate circumstances, the community may be entitled to reimbursement for the reasonable value of that exclusive post-separation use. This potential reimbursement is commonly called a Watts charge.

Watts Charges Address Exclusive Use of Community Property

A Watts charge generally concerns the reasonable value of one spouse’s exclusive use of a community property asset after separation.

The family residence is a common example.

Suppose both spouses have a community interest in the marital home, but after separation only one spouse remains in the residence. The occupying spouse receives the benefit of living in property in which the community has an interest, while the other spouse does not receive the same use.

Under appropriate circumstances, the family court may consider whether the community should be reimbursed for the reasonable value of that exclusive use.

The analysis is not limited to determining what the mortgage payment happens to be. The issue concerns the reasonable value of using the community property.

This makes Watts charges different from simply assigning responsibility for household bills while a divorce is pending.

Watts Charges and Epstein Credits Address Different Issues

Watts charges are frequently discussed together with Epstein credits because both can arise after spouses separate.

They are not the same remedy.

An Epstein credit generally involves potential reimbursement when one spouse uses separate property after separation to pay a community obligation.

A Watts charge generally addresses the reasonable value of one spouse’s exclusive post-separation use of community property.

Both issues can arise from the same residence.

For example, one spouse might remain in the family home after separation while also using separate property earnings to make mortgage payments. The mortgage payments may potentially create an Epstein reimbursement issue, while the spouse’s exclusive occupancy may create a Watts issue.

The court may therefore need to consider both sides of the financial picture rather than examining either claim in isolation.

When the spouse occupying the residence also makes the mortgage payments, a Watts claim may sometimes operate primarily as an offset against that spouse’s potential reimbursement claim.

A Community Interest in the Property Can Still Matter

A Watts issue is not necessarily limited to a residence that is entirely community property.

California family law recognizes circumstances in which the community owns only a partial interest in a marital residence.

For example, a home originally acquired as one spouse’s separate property may later develop a community interest because community funds were used to reduce mortgage principal during marriage. That situation can involve a Moore/Marsden calculation.

A spouse’s post-separation occupation of property containing this type of community interest can still potentially raise a Watts issue.

The various property concepts should therefore remain separate. Moore/Marsden addresses the respective community and separate ownership interests in qualifying real property. Epstein concerns certain post-separation payments of community obligations from separate property. Watts concerns the value of exclusive post-separation use of community property.

Exclusive Use Can Become Part of the Final Property Accounting

A spouse who remains in a community residence after separation should not assume that occupancy has no effect on the eventual California property division. In appropriate circumstances, the reasonable value of exclusive use can become part of the post-separation accounting. Because Watts charges may interact with mortgage payments, Epstein reimbursement claims, and partial community interests in property, the financial result depends on more than simply identifying which spouse remained in the home.