In Balogh v. Balogh, an appeal argued before the Supreme Court of Hawaii, the parties were married in 1981. At the time of the wedding, the wife owned two properties in New Jersey. She sold one of the properties in 1992 for just less than $90,000. The other property was a vacant lot that she had purchased for just under $30,000.
The husband, at the time of the marriage, owned a piece of property that he soon sold for $40,000. According to the husband's testimony, the couple built a home on the wife's vacant lot. Both husband and wife were highly educated.
During the marriage, they couple would regularly vacation in Hawaii and eventually purchased a vacant lot for $280,000 in 2002. The couple took out a home equity line of credit (HELOC) on their home in New Jersey to purchase the lot in Hawaii.
As your Birmingham, Alabama divorce lawyer can explain, cases involving premarital assets that get comingled with marital assets may require significant litigation when trying to reach a property distribution.
In Balogh, the parties sold their home for $545,000 and moved to Hawaii so that the wife could care for her elderly parents. The couple took the money from what remained from the sale of their home after repaying the HELOC plus an additional $350,000 from their joint savings to build a house on the vacant lot.
While construction was supposed to take two years, there were many problems during the construction process, and, eventually, the contractor walked off the job and filed (inappropriately) a mechanic's lien on the property in the amount of $150,000. To make matters worse, the homeowner's association attempted to assess a $350,000 penalty on the couple because they had not completed construction within the required two-year period. The couple was forced to pay an additional $60,000 to additional contractors, but the home was still not finished, though the couple was able to move in at this point.
During this difficult financial time, the marital relations deteriorated. The husband would routinely go outside of the home without wearing any clothes, and neighbors would complain. His wife accused him of having an affair because he had lost weight, was going to the gym, and was well tanned, according to court records.
After months of the same arguments, the wife proposed that, if her husband was serious about their marriage, he should sign a document that discusses how property would be divided upon a divorce. Their agreement provided that the wife would receive 75 percent of the sale of their property, the entire contents of the house, and any vehicles the parties owned. They signed this document and two others like it that gave additional property to the wife upon a divorce.
The husband was later arrested for exposing himself at a shopping mall, and the marriage completely fell apart. During the divorce proceedings, the trial court determined that these agreements were not enforceable. The judge found that they were made under duress and were not supported by valid consideration. Typically, while a prenuptial agreement is enforceable, a postnuptial agreement (during marriage) is not enforceable, because it is not what the law calls a bargained-for exchange.
Ultimately, in what is a departure from long-standing legal doctrine, the Supreme Court of Hawaii decided to reverse the trial court's order.
Contact Birmingham divorce and family law attorney Steven Eversole at (866) 831-5292.
Balogh v. Balogh, August 7, 2014, Supreme Court of Hawaii