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Friday, August 22, 2014

Balogh v. Balogh - Enforceabilty of Prenuptial, Postnuptial Agreements

Prenuptial and post-nuptial agreements are considered binding contracts that can be legally enforced by the courts in the event of a divorce, even when the agreement runs contrary to what a judge might decide if given the discretion.

However, there is a chance that such agreements could be deemed unenforceable by the court. Our Brooklyn prenuptial agreement attorneys know this occurs mostly in cases where the balance of power was skewed (i.e., one party wasn't properly represented by legal counsel, one party felt bullied) or when the language contained therein is unclear or runs contrary to public policy.

Interpreting whether such contracts meet the criteria necessary in order to be considered legally binding will be up to the judge. However, as the recent case of Balogh v. Balogh shows, different courts may have varying interpretations.

According to the Hawaii Supreme Court records in this case, the primary issue of contention was the enforceability of a number of agreements the pair made during the marriage.

The couple married in 1981 in New Jersey. Both were well-educated with master's degrees and well-paying jobs.

 In 2003, they moved to Oahu and began construction of a home on a vacant lot they had purchased, using money the husband had inherited. Five years later, after a period of tension during their marriage, the parties signed a handwritten document, indicating if they were separated, the wife would retain 75 percent of the profits from the sale of the home, the contents (including the husband's tools and clothing) and all of their vehicles.

(The wife reportedly suspected the husband of an affair, and demanded that if he was serious about saving their marriage, they needed to "write something up.")

Several weeks later, the pair signed a typewritten "Memorandum of Understanding," which reiterated these points, as well as indicated the husband should pay the wife $100,000 in lieu of alimony and court costs.The wife would later say she was not intent on divorce at that point, but rather was trying to save the marriage.

Tension between the two continued, and the husband moved out of the marital home in August 2009. Several weeks later, he signed a quitclaim deed transferring his entire interest in the property to his wife for $10.

In January 2010, the wife filed a complaint for divorce.

The family court did not honor the agreements the pair had made. In spite of those documents, the court ruled each party should receive exactly one-half the interest in the property, valued at $1.6 million at the time of the divorce. The court ruled it would be unconscionable to enforce the deed or other agreements because the husband acted under coercion and duress.

The wife appealed, and the appellate court reversed, finding the contracts enforceable because the husband had signed them voluntarily.

The husband appealed this order.

In its review, the state supreme court first ruled the quitclaim deed did not amount to a separation agreement that altered either party's right to equitable division of property such that the wife should receive the entire portion of it. Therefore, the court found the quitclaim deed unenforceable. 

However, the Memorandum of Understanding, the court found, was enforceable because it was entered into voluntarily. The court noted both parties were well-educated, there was no indication the wife had made threats to the husband in order to force him to sign and there was no indication of any improper methods of persuasion. Additionally, the language was clear and unambiguous.

If you are contemplating a divorce in New York City, call our offices at (718) 864-2011.

Additional Resources:

Balogh v. Balogh , Aug. 7, 2014, Hawaii Supreme Court

More Blog Entries:

Brooklyn Divorce: What to Do With The House? July 30, 2014, Brooklyn Divorce Lawyer Blog


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