At its core, separation agreements and property settlement agreements are contracts. As such, Wake County courts have invalidated such agreements on the same grounds as other contracts might be invalidated under North Carolina law. If you are in need of having a separation agreement or property settlement agreement drafted or reviewed, contact the Wake County family law attorneys of Maginnis Law, PLLC at 919.960.1545. Because there are many ways in which a separation agreement can be voided, having a knowledgeable attorney assist with any drafting is very important.The most likely reasons to invalidate separation agreements are for the following reasons:
- Public policy concerns:
North Carolina statutes state that separation agreements are not valid if they are against public policy. There are many public policy concerns of which your attorney must be aware. For example, if a husband and wife enter into a separation agreement while living together with no immediate intent of separation, the agreement will likely be voided. The separation agreement will only be valid if it is conditioned on obtaining a divorce.
2. Reconciliation:
A separation agreement is terminated upon a resumption of the marital relationship. Unlike years ago, isolated incidents of sexual relations will not be enough. After a separation agreement is voided, a subsequent separation of the parties will not revive the agreement. However, when a separation agreement provides for a lump sum alimony payment in exchange for a release of all future claims of alimony, the separation agreement may continue to be in place. In contrast to separation agreements, property settlement agreements will not be terminated if the parties reconcile.
3. Provisions modifiable as a matter of law:
All provisions in a separation agreement related to child custody, visitation, and child support are always subject to modification. These private agreements are not binding on the courts. The best interest of the child is the guiding factor. When the husband and wife enter into a separation agreement with provisions related to child support, there is a presumption that the amount agreed upon is just and reasonable. Generally this is not difficult to nullify if the child support provisions are unjustifiable. In contrast, provisions in a separation agreement dealing with alimony are not normally subject to modification without a showing of fraud.
4. Minority or infancy:
In North Carolina, married people under 18 can void a separation agreement after they reach 18 years of age. That person must void the agreement within a reasonable time after reaching majority, otherwise it will be ratified.
5. Mental incompetency:
If a mentally incompetent person enters into a separation agreement, it is voidable. This means that only the incompetent person has the power of invalidating the agreement. There are certain exceptions to this rule. The agreement will not be invalidated if the competent person a) did not know of the mental incapacity; b) had no information that would put a reasonable person on notice; c) the separation agreement is fair; and d) an unfair advantage was not taken.
6. Fraud, duress, and undue influence:
The factors most often alleged in voiding a separation agreement are fraud, duress, and undue influence. To be valid, a separation agreement must be fair and reasonable, and must have been signed without coercion or undue influence, and with full knowledge of each circumstance, condition, and right of the parties.
Fraud is based upon deception by misrepresentation or concealment of some material facts. This is one area that is different than general contract law – because of the confidential nature of the marital relationship, full and complete disclosure and fairness is required. Duress occurs when a person is induced to make a contract or forego something under circumstances that deprive him of free will. Undue influence is similar to duress except it does not require the high level of pressure that duress requires.
7. Breach and Waiver:
Attacks can be made on the validity of a separation agreement when the other party breaches a provision. When a breach occurs, the breaching party will typically allege that the other party waived the right to complain of the breach by failing to perform their own obligations in the separation agreement. Oftentimes this occurs in the payment of alimony. This is a very fact-specific inquiry requiring your attorney to look at the totality of the circumstances.
8. Failure to specify or include all property:
Because separation agreements are oftentimes used in lieu of equitable distribution lawsuits, the agreement must fairly distribute the parties’ property. To do this properly, it is necessary to: a) identify the property owned; b) value it; and c) order its distribution. In theory this is an easy process but in practice it can be tremendously difficult. As always, there is a duty to disclose all marital assets and property, and failure to do so constitutes fraud and may support a voiding of the agreement.
9. Failure to include a release of all marital rights:
A separation agreement or property settlement agreement must include language releasing marital rights. Otherwise it may be void on its face.
10. Inequitable terms:
North Carolina law requires separation agreements and property settlement agreements to distribute property in a manner deemed by the parties to be equitable. The property settlement agreements need language stating that the parties agree that the distribution of the property is fair and equitable. Problems occasionally arise when one person is unfairly excluded from marital assets.
11. Unconscionability:
There are two ways a court can find a separation agreement or property settlement is unconscionable; procedurally and/or substantively. Procedural unconscionability occurs during the bargaining process, and may include fraud, coercion, undue influence, misrepresentation, and inadequate disclosure. Substantive unconscionably involves the one-sidedness of an agreement. The inequality of the terms must generally be so apparent as to shock the judgment of a reasonable person and so oppressive that no person would agree to the agreement.
These are only some of the problems that can occur with separation or property settlement agreements. A wide variety of mistakes can result in a separation or property settlement agreement being invalidated. It is important to have an attorney draft or review any separation agreement or property settlement agreement.
