California Prenuptial Agreements Must Strictly Comply with the Law or the Courts Will Not Enforce Them
In yet another case the California Courts have made clear that strict adherence to the laws regarding prenuptial agreements is required for the prenuptial agreement to be enforceable.
In January of 2018 a California Appellate Court determined that a prenup initially drafted by the unrepresented husband which was revised by wife’s attorney, was not enforceable against husband, who did not have at least 7 days to review final version before he signed it.
Prenuptial agreements will be enforced by the Courts, if and only if, they meet all the statutory requirements. A prenup is never enforceable if it or the accompanying documents were signed under duress, fraud, or undue influence or by parties who were not competent to enter into them. Family Code §1615(c) provides that a prenup will be considered to have been executed involuntarily (and thus unenforceable) unless the unrepresented party against whom enforcement is sought had not less than 7 days to review it before signing and had been advised to seek independent counsel before signing it. If the party chooses not to seek independent counsel, he or she must execute a written waiver of representation by separate counsel. The statute requires that an unrepresented party against whom enforcement is sought must be fully informed of the terms and basic effects of the prenup, as well as the rights and obligations he or she would give up on signing it. This information must be memorialized in writing and delivered to the unrepresented party, who must then execute a declaration of having received the writing and by whom the information was given. A prenup is never enforceable if it or the accompanying documents were signed under duress, fraud, or undue influence or by parties who were not competent to enter into them.
In this case After Matthew Clarke and Claudia Akel became engaged, they set their wedding date as March 7, 2008. On February 26, 2008, Matthew, using a form he downloaded from the internet, drafted a prenup which, among other things, provided that his separate property house would remain his separate property after the marriage. However, it also provided that Claudia would acquire a 2% interest in the house for each year of their marriage, and the house would become community property after 7 years of marriage. In addition, Claudia and any children would have a lifetime tenancy in the house.
Matthew retained attorney, Clifford Chernick, to represent Claudia in the negotiation and execution of the prenup, but “did not believe he needed an attorney himself” and did not seek advice from independent counsel. He mailed a copy of his draft prenup to Chernick on February 29 and followed up with a revised draft on March 3, which contained the same provisions regarding his house. Chernick reviewed the draft and made notes regarding certain issues.
On March 4, 2008, Matthew and Claudia met with Chernick to discuss the prenup. The attorney advised Matthew to seek independent counsel, but Matthew said, “he was able to represent himself.” Chernick then met separately with Claudia to explain the provisions of the prenup and its legal effect. The attorney also asked Matthew about his understanding of the term “divorce” in connection with Claudia’s acquiring a 2% interest in his house and discussed whether Matthew intended to waive his right to Fam C §2640 reimbursement if the house became community property after 7 years.
On March 5, 2008, Chernick sent Matthew and Claudia each copies of the revised prenup, to which he had added several provisions regarding the parties’ waiver of their separate property interests in any community property (including Fam, C §2640 reimbursement), Matthew’s separate waiver of such reimbursement in connection with his house, and his obligation to pay all expenses of the house during Claudia’s lifetime tenancy. The revised prenup also contained a statement that each party had had more than 7 days to review the document before signing it. Matthew and Claudia signed this prenup on March 8, 2008. Matthew also executed a separate written waiver of counsel, stating that Chernick had advised him to retain separate counsel and acknowledging that the attorney represented Claudia alone.
Matthew and Claudia separated “in 2013 or 2014” and began divorce proceedings. She sought to enforce the prenup provision giving her a lifetime tenancy in his house. At trial the court that Matthew Chernick testified. The lower court concluded that the prenup was not enforceable because Matthew was not presented with the final version at least 7 days before he signed it, as required by Family Code §1615(c)(2). It also found that the document was unenforceable under Fam C §1615(c)(3) because Matthew had not received a written advisement of the rights he was giving up under the prenup and had not signed a written waiver of those rights.
The court of appeal agreed with the trial court. It stated Matthew did not have seven days to review and thus the prenup was unenforceable. The appellate court did not consider the second finding of the trial court-- Matthew had not received a written advisement of the rights he was giving up under the prenup and had not signed a written waiver of those rights. A lack of the statutory seven days to review made the prenup unenforceable.
TAKEAWAY: If you desire to have a prenuptial agreement you must be scrupulous in complying with all the relevant laws concerning them. In this case one might argue that the result was unfair as it was Matthew’s agreement with a few modifications from Claudia’s lawyer. The courts will be unimpressed. If you are going to have a prenuptial agreement ensure both parties are represented by independent counsel, there are full disclosures and each party has the time to review the prenup required by the law.
The case is In re Marriage of Clarke and Akel (January 2018) 19 Cal.App.5th 914, 228 Cal.Rptr.3d 483