An interesting issue was recently considered by the Court in the case of Muller v. Muller. Specifically, the Appellate Division examined whether a husband could compel the sale of the marital home when he had conveyed his interest by way of deed about ten years earlier, but the parties’ Property Settlement Agreement (“PSA”) had provided for the husband’s continued ownership.

The parties in Muller were married for 17 years. When they divorced in 1990, they entered into a PSA, which, in part, provided as follows:

EQUITABLE DISTRIBUTION
A. Husband and Wife agree to divide equally the personalty . . . upon sale of the premises or child’s emancipation, whichever shall first occur.
B. Upon execution of contract of sale of the above premises, Husband agrees to put his interest in the marital home in trust for Child.
. . . .

REAL ESTATE
A. Husband agrees to pay the mortgage payments [on the marital home] . . . until the time that child graduates from college, or reaches the age of 22, whichever shall first occur[.]

The husband paid the mortgage from the time of the divorce until around 1999 when he defaulted on the payments. The mortgagee instituted foreclosure proceedings in or around July of 2000. In order to avoid foreclosure, the wife borrowed about $60,000 and refinanced the property. The husband executed a deed and conveyed the wife his ownership interest in the property for consideration of $50,000. As a result, the wife exonerated him of the debt the he had incurred by defaulting on the mortgage payments. At the point, the child was 21 years old and had graduated from college.

About 10 years later, in September of 2010, the husband filed a motion to, among other things, compel the sale of the martial home and to transfer to him one-half of the sale proceeds. He asserted that the transfer of title was not intended to relinquish his interest in the property, but rather, to avoid his creditors. He also argued that he had not read the PSA completely and the provision regarding the trust for the parties daughter was a mistake. In addition, he argued that the wife had waived the interest of the parties’ daughter as provided in the PSA.

In her opposition to the husband’s motion, the wife argued that the husband defaulted on the loan, she refinanced the mortgage to prevent foreclosure, and the husband transferred to property to be relieved of his debt. She also denied waiving the interest of the parties daughter.

After conducting an interview of the parties’ daughter to determine whether the daughter made “an affirmative, voluntary waiver of her interest,” the trial judge rendered his decision and found that the daughter had not waived her interest in the property. He further concluded that the husband had relinquished his interest in the property. The husband’s appeal followed.

On October 4, 2011, the Appellate Division rendered its decision and affirmed the decision of the trial court. In doing so, the Appellate Division was bound by the fact that "findings by the trial court are binding on appeal when supported by adequate, substantial, credible evidence." The Court found that the trial court’s decision was in fact supported by substantial, credible evidence and specifically, that the Court had justly found that

[the husband] relinquished all of his right, title, and interest in and to the [property] by virtue of his execution and delivery of a Bargain and Sale, with Covenants Against Grantors’ Acts on May 2, 2000. The deed stated a consideration of [$50,000]; [the husband] was exonerated from liability on the note and mortgage that was in foreclosure due to his failure to make the mortgage payments; and [the husband] was not liable on the new note for which [the wife] bore exclusive liability.

The Court thus agreed with the trial court’s finding that any potential interest the husband had in the property was conveyed to the wife when he executed the deed in 2000. At that point, he lost his ability to compel the sale of the home.

It seems that in this case, the Court was really considering which document controlled when it came to the husband’s interest in the martial home – the PSA or the deed. True, there was no order or other agreement specifically modifying the PSA. However, the Court found that the deed was sufficient evidence that the parties had intended to modify the PSA and that the husband no longer had an interest in the marital home as a result. And of course, another important lesson here is that “I didn’t read it” is not a defense. So read all documents carefully, and be vigilant about spotting any “mistakes.” You will not be able to go back and change those provisions later absent extraordinary circumstances.

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