Marital Settlement Agreements and Equitable Distribution

Nov 26, 2013

Oftentimes during a New Jersey divorce, the parties will enter into a Marriage Settlement Agreement (MSA) or Property Settlement Agreement (PSA) which explicitly details the terms that the parties agree to. These terms most often deal with property division, or equitable distribution. Once the agreement is reached, the MSA is incorporated in the final judgment of divorce. When a dispute arises later about the MSA, after the parties have already agreed to it, absent a showing that it should be modified, the court will enforce it. A defendant realized this in a recent case, Pillar v. Pillar.

In this case, the parties entered into a MSA, pursuant to which the plaintiff, who had an obligation to pay the defendant $181,000, secured that obligation by recording a second mortgage and note. Later, the defendant filed a motion to enforce his rights to the unpaid balance of the payments.

The Family Part judge found that, under the MSA, if the plaintiff could not pay the remaining balance after the defendant gave her notice of money owed, then the defendant was “entitled to exercise his rights pursuant to the mortgage.” The plaintiff had modified the mortgage documents, eliminating any obligation to “immediately pay the full amount of all unpaid principal, interest, and other amounts due,” and the defendant accepted these modified documents as a security to the plaintiff’s obligation. The Family Part judge held that this left the defendant with two options: he had the option to foreclose on the mortgage or wait until the home was sold. In both instances he was to receive interest. The defendant did not, however, have a right to “obtain and execute a judgment for the unpaid balance as a matter of course.”

The Appellate Division affirmed. The court explained that MSAs negotiated by two parties in a New Jersey divorce are generally enforced, and held that the defendant in this case did not show grounds to modify the agreement between the parties.

This case shows the importance of taking care when drafting and agreeing to MSAs and PSAs to be incorporated in your final judgment of divorce. As we have previously explained, once the agreement is incorporated and the divorce judgment entered, you will be bound by that agreement absent some showing that it should be modified.

Given the long-term effect that MSAs and PSAs can have on you and your divorce, contact an attorney to help you when entering into one of these agreements. If you have questions about your New Jersey divorce, please contact the experienced attorneys at Sarno da Costa D’Aniello Maceri LLC at 973-274-5200.