Ryder v. Ryder – Divorce Agreements Must be Carefully Drafted

One fact that is difficult for many divorcing couples to grasp is that just because something is ordered in family court does not mean third parties must adhere to it.
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A common example is when a husband is absolved of making mortgage payments on a marital home in which he no longer resides. This may be forfeited in exchange for some other advantage in the divorce settlement. However, the bank is not required to adhere to this agreement – it’s solely between husband and wife. So if husband’s name is on the mortgage, he’s technically still responsible to pay that mortgage, even if he doesn’t live there and even if the family court says he isn’t obligated. If the wife stops paying those mortgage payments, the husband becomes responsible for the total amount, or else the property will go into foreclosure and his credit will be dragged through the mud too.

The only recourse he would have at that point would be to sue the wife for damages under their prior agreement.

The bottom line is banks and other third parties aren’t subject to the divorce agreement. That’s why the agreements must be drafted very carefully with thorough review by your Hammond divorce lawyer to ensure your rights are going to be protected.

A similar case was recently before the Nebraska Supreme Court in Ryder v. Ryder.

In this case, the pair were divorced in June 2013. Before the divorce was finalized, the parting couple entered into a property settlement agreement and parenting plan. This agreement provided for various items of property to be dispersed to each. The marital residence, they agreed, would go to husband, as it was his before they married. This meant the wife had to leave the home. Because wife anticipated her need for different housing, they signed an agreement with a third party to acquire another home.

That agreement isn’t part of the record, so it’s not clear if it was signed before or after the property agreement. Wife said she was the last to sign and did so in August 2013, which was several months after the property agreement was signed and the divorce decree entered.

Within that property agreement, husband agreed to “assist (wife) in obtaining a loan from (a specified bank) for $94,000 in order to purchase (a specific residence).”

Several months later, the ex-husband filed a motion for order to vacate or modify the divorce decree or else deem his obligation satisfied. He alleged he did assist his ex-wife in obtaining the loan, but she was unwilling to enter the loan agreement. Her refusal, he said, resulted in the purchase agreement for the residence expiring. He said in an effort to comply with the decree, he bought the property himself and offered a loan to his ex-wife to purchase the property from him. However, she refused this arrangement.

At a hearing, it was revealed ex-husband was told he would need to co-sign the loan. Because he wouldn’t be living there, the bank required additional collateral from him. After learning this, he approached the ex-wife with a “side deal” under which the ex-wife would execute a quit-claim deed to ex-husband, which would be held in escrow, and then when she failed to make the loan payment for two months, he would acquire the home, put it on the market and sell it directly to her. He reportedly wanted to do this as a way to protect himself from having to pay his ex-wife’s loan. He insisted he wasn’t making any money off the situation, but the ex-wife did not want to agree.

He believed this effort allowed him to fulfill his obligations per the divorce decree.

Ex-wife countered that her understanding of the property agreement as far as the loan arrangement was that the ex-husband would co-sign the loan and make the down payment. Yet when she gave him the documents to sign for this purpose, he refused to do so and then came up with this alternate plan.

District court granted husband’s motion to vacate on grounds the “obligation to assist” was too vague to be enforceable. However, the Nebraska Supreme Court reversed. The agreement was indeed ambiguous. However, this ambiguity didn’t mean there was a basis to vacate or modify the decree, particularly because there was not finding of fraud or gross inequity.

Therefore, the case was remanded back to district court to decide whether the “assistance” portion of the agreement had been fulfilled.

Our Indiana divorce lawyers are fully aware that divorce agreements must be meticulously drafted and carefully reviewed. This requires a legal team with experience.

Indiana Family Law Attorney Burton A. Padove handles divorce and child custody matters throughout northern Indiana, including Gary and Hammond. Call Toll Free 877-446-5294.

Additional Resources:
Ryder v. Ryder, April 10, 2015, Nebraska Supreme Court
More Blog Entries:
Indiana Divorce Often Stems From Major Life Challenges, Changes, April 20, 2015, Indiana Divorce Lawyer Blog