The New York Supreme court in Monroe County, New York recently decided a case involving, among other things, a dispute regarding whether the wife had any financial interest in the marital home. The husband purchased a house before the parties were married. The husband made the down payment on the house and monthly mortgage payments prior to the marriage. In addition, the husband made substantial improvements to the home before the marriage. Without getting an appraisal, the coupled agreed in the pre-nuptial agreement that the house was worth $750,000. The wife also agreed that, as long as the value of the home remains $750,000 or less, she would waive any financial interest in the house in the event of a divorce. The couple subsequently filed for divorced and the house was appraised at only $542,000.
Even though the house was worth less than $750,000 at the time of the divorce, the wife still argued that she should receive a financial interest in the home.
Her argument was mutual mistake in the drafting of the pre-nuptial agreement. She argued that both husband and wife were mistaken in the value of the home at the time of the execution of the pre-nuptial agreement. She argued that the home was worth much less than $750,000.00 and therefore the court should disregard her waiver of any financial interest in the marital home. The court disagreed with her and ruled “the selection of an estimate value that both sides assented to insert in the agreement — may not be fair or just in a subsequent divorce action, but it does not, in and of itself, constitute a “mutual mistake.”
Bottom line: As Ronald Reagan said “Trust but verify!” Always get a professional appraisal of any financial assets prior to executing a marital agreement.