Can Your Client Do What She Agreed to Do?

May 24, 2016 § Leave a comment

When Karen and Rickey Chance got an ID divorce in 2003, the parties’ PSA provided that Karen would get ownership of a home in Ocean Springs. Rickey was to be responsible to obtain a 30-year mortgage on the property, and to pay the mortgage debt and one-half of the ad valorem taxes for 96 months. Karen was responsible to pay her one-half of the ad valorem taxes, the hazard insurance, and to pay all taxes, insurance, and mortgage debt payments after Rickey’s obligation expired. Rickey also was to pay Karen alimony.

In 2004, Rickey got the mortgage, and the closing attorney suggested in a letter that Rickey simply reduce his alimony payments by the amount of Karen’s monthly obligation, but neither party acted on the recommendation.

To make a long story somewhat shorter, Karen never paid either her half of the taxes or the hazard insurance between 2003 and 2013. In 2013, Karen did send Rickey nearly $4,500 to pay her share of the 2013 expenses.

In the 10-year interim between 2003 and 2013, the parties talked about the situation. Karen steadfastly maintained that she did not have the financial ability to carry out her end of the deal.

In 2013, Rickey filed a petition for contempt against Karen, who responded with several defenses, most notably that of inability to pay. After a hearing the chancellor awarded Rickey a judgment for $38,584.90, and attorney’s fees. Karen appealed.

In the case of Chance v. Chance, decided May 10, 2016, the COA affirmed. You can read the opinion for yourself to see how the court dealt with Karen’s claims of laches, inability to pay, and error in award of attorney’s fees.

I want to focus on the agreement itself:

I have seen several PSA’s lately in which one party agrees to refinance the home within some stated period of time. In every case, when I asked the lawyer whether the obligated party had the ability to do it, the answer was a shrug with a whimsical smile and “that’s what they agreed to do.” Yes, but if it’s your client who is on the hook, have you discussed whether he or she has the ability to do it? And if it’s the other party who has the duty, what impact will it have on your client if he or she proves incapable of doing as promised? Have you explored these things?
One critical reason why this is so important to your client’s interest is that the property-division portions of a PSA are unmodifiable. East v. East, 493 So.2d 927, 931 (Miss. 1986). Your client does not get a do-over on the “oops” principle.
Another important factor is that attempting to prove inability to pay is rarely successful. The burden is heavy, as I have pointed out here before.
To avoid these swivet-inducing situations, build some alternatives into the agreement. If, say, your client ever can not pay her share of the taxes or insurance, the home could be listed for sale, the other party may reduce alimony and pay the taxes and insurance himself until sold, and he will be reimbursed from the proceeds. That’s one example; I am sure your creative legal genius can conjure up many others.
Remember that if all you do is take your client’s notes and convert them into a legal-looking sheaf of papers, you are nothing more than a clerk-typist; you are misleading the public and fooling yourself if that’s what you do and you call yourself a lawyer.

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