In a recent New Jersey divorce case (Crimi v. Crimi), the parties entered into a Property Settlement Agreement on March 25, 2005, whereby the Wife was to receive the net proceeds from the sale of the marital home. In that Agreement, the Husband guaranteed her a minimum of $7 million less certain agreed upon deductions. If the sales price exceeded $7 million, the Wife would receive a greater amount.

 

In 2004, the house was appraised at $7,250,000. During 2005, the real estate value dropped and the listing price of the house was periodically reduced (from a high of $8 million to $6.5 million). The Wife agreed to modify the parties’ Property Settlement Agreement stating she would receive $6.5 million (less certain agreed upon deductions) instead of $7 million.  

 

The real estate value continued to plummet, and, in October 2009, the Husband filed a Motion with the Court to be released from his obligation to guarantee the Wife $6.5 million (less deductions). He had also requested relief from other agreed upon obligations.  

 

In his Certification to the Court, the Husband stated that no one could have predicted the national economic crisis that occurred beginning in 2008. He also stated that the consequences to him were drastically different than what the parties intended when they reached their Agreement in 2005. The Wife filed a Cross-Motion to enforce the parties’ Agreement. 

 

The Trial Court as well as the Appellate Division noted that it is well-settled law that “property division or equitable distribution provisions may not be adjusted after divorce to reflect unanticipated changes in the parties’ circumstances.” Therefore, even if subsequent events could not have been contemplated when the parties entered the Agreement, modification will not be granted. 

 

In this case, the Appellate Court noted that the Husband claimed the recession and decline of the housing market was an exceptional unanticipated circumstance sufficient to warrant modification. The Court disagreed, stating that both parties were aware that the value of the real estate could have gone up or down since they agreed to a sum certain irrespective of the actual sales price.  

 

If you would like to discuss this matter in more detail, please feel free to contact me here in my firm’s Lawrenceville, New Jersey office.