Published On: Sun, Apr 13th, 2014

Bubble Trouble

Michael-H.-Gora-284x336By Michael H. Gora

Seven years ago, at my husband’s suggestion, we met with a paralegal at her office in West Palm Beach to work out a marital settlement agreement.

We wanted to save money, so we did not want to hire lawyers.  We had no children, had only been married for seven years, and both had good jobs.  The only property that we had was a nice large house in Jupiter, which we had bought for just over a million dollars in 2004.   By 2006, we both agreed that the house was worth about a million five.  We have an interest only mortgage of about $600,000.00

We agreed to sell the house on the market, but that I could live in the house for seven years before putting it on the market.  We thought it was a good investment.  We would share the mortgage and other house expenses.

My husband however retained an option to buy me out after the seven years.  The contract did not provide a price for that buyout, but my husband told me that I was guaranteed no less than my equity at the time of the marital settlement agreement.

A couple of months ago my now former husband sent me an e-mail telling me that he was going to exercise his option to buy me out, as the house had been on the market for a year and not sold.  I asked, “At what price”, and he said, “Current market.”

I told him he was crazy, he had guaranteed me market value at the time we made the deal.  He said that he did not remember, and the contract never said that.  We had an appraisal done and the house is now worth $650,000.  My share is now $25,000 instead of $450,000.00.   I want to sell to him at the old market value, because of what he told me.  Do you think I can win?  Is it worth hiring an attorney?

Marital settlement agreements are merely contracts, and the rules of interpreting contracts generally apply.  As a rule, contracts regarding the sale of real estate must be in writing in order to be enforceable.

Another rule governing the interpretations of contracts is that all of the terms should be interpreted in a consistent manner that makes sense, if possible.  In the contract that you describe, there is a missing element, the manner in which the price would be determined if your former husband exercised his option.

However, your agreed attempts to sell the house to third parties by listing it with a real estate broker calls for the house to be sold at the fair market value at the time of the sale.  Your unexpected problem was cause by the bursting real estate bubble.

You and your former husband both assumed the risk of the market on sales to third persons, but you want him to bear the full brunt of the market if he exercises his option by trying to make him buy you out at an old and no longer fair price.

It appears very unlikely that a Judge would find in your favor based on the contract and surrounding circumstances.  There seems to be no reason that a judge would select a fair market value for the option, which would be different from present market value.

 

Michael H. Gora, Boca Raton divorce lawyer, has been certified by the Board of Specialization of The Florida Bar as a specialist in family and matrimonial law, and is a partner with Shapiro Blasi Wasserman & Gora P.A.  Questions may be submitted to Mr. Gora at mhgora@sbwlawfirm.com.

 

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