Irregularities in Execution of Marital Agreement Acknowledgements:

This was originally published on the SGR Blog.

Court of Appeals Decides If Contracts Were Nevertheless Enforceable?

Whether signed before or after marriage, nuptial agreements must be acknowledged in the manner specified in the Domestic Relations Law. The Court of Appeals recently addressed two permutations of the same question: whether non-compliance with the signature acknowledgment requirements of DRL section 236(B)(3) rendered a nuptial agreement irrevocably unenforceable?

Anderson examined whether the acknowledgment must be contemporaneous with the signing of the agreement to comply with section 236(B)(3). The Court concluded that the signature must be acknowledged contemporaneously within a reasonable time of signing. Because in Anderson the wife signed and acknowledged the agreement the month after the wedding, while the husband delayed nearly seven years before acknowledging his signature and did so shortly before he commenced a divorce action, the husband’s acknowledgment was ineffective and the nuptial agreement unenforceable. The only remedy under the circumstances was for the parties to reaffirm the agreement’s terms, which did not occur.

In Koegel, the acknowledgments of each party were made contemporaneously with the signing of the nuptial agreement, but the certificates of acknowledgment were defective. The parties’ lawyers failed to include in the respective certificates the undisputed fact that the signer was personally known to them at the time of signing. But where, as was the case here, the signatories satisfied the prerequisites for a valid certificate of acknowledgment—i.e., the defect in the certificate of acknowledgment was occasioned by the notary’s or other official’s error and not by a flaw in the parties’ actual signing and acknowledgment—a reaffirmation of the agreement terms was unnecessary. That defect in the certificate was overcome with extrinsic evidence of the official’s personal knowledge or proof of identity of the signer.

Sectionv 236(B)(3) provides that, “[a]n agreement by the parties, made before or during the marriage, shall be valid and enforceable in a matrimonial action if such agreement is in writing, subscribed by the parties, and acknowledged or proven in the manner required to entitle a deed to be recorded.”  Real Property Law sections 292, 303, and 306 must be read together to discern the requisites of a proper acknowledgment for the purposes of section 236(B)(3). Specifically, section 292 “requires that the party signing the document orally acknowledge to the notary public or other officer that [they] in fact signed the document”. Section 303 requires that the notary or other officer taking the acknowledgment “knows or has satisfactory evidence that the person making it is the person described in and who executed such instrument”. And section 306 “compels the notary or other officer to execute ‘a certificate . . . stating all the matters required to be done, known, or proved’ and to endorse or attach that certificate to the document”.

Generally, acknowledgment serves to prove the identity of the person whose name appears on an instrument and to authenticate the signature of such person. The acknowledgment also necessarily imposes on the signer a measure of deliberation in the act of executing the document. And, because marital agreements within section 236(B)(3) encompass important personal rights and family interests, the formality of acknowledgment underscores the weighty personal choices to relinquish significant property or inheritance rights or resolve important issues concerning child custody, education, and care. A couple’s decision to be bound by the terms of a nuptial agreement is necessarily based on their understanding of each other’s respective economic status and their future as a couple at the time they sign the agreement, and the formalities are intended to impress upon the signatories the consequences at the moment of affirmation. To serve their intended purpose, these formalities must be completed close in time to when each party weighs the consequences of their respective decisions and signs.

The parties’ compliance must be confirmed in a manner adequate under the law. The certificate of acknowledgment establishes that the signer made the oral declaration compelled by section 292, and the notary or other official either actually knew the identity of the signer or secured `satisfactory evidence’ of identity, ensuring that the signer was the person described in the document. Thus, a properly executed certificate is the means by which the parties document that past events complied with the statutory requirements.

Candy Anderson signed and acknowledged a nuptial agreement with Jack Anderson the month after their wedding. It was undisputed that, regardless of when Jack signed the agreement, his signature was not acknowledged until nearly seven years later, shortly before he commenced a divorce action and in anticipation of Candy’s divorce filing. With full knowledge that Candy intended to end the marriage, and after his attorney informed him that his signature had not been acknowledged as required by section 236(B)(3), Jack at last attempted to validate the agreement and appeared before a notary public where he orally acknowledged that the signature on the agreement was his. Jack commenced formal divorce proceedings five days later.

Candy then filed for divorce and, in an ancillary action, moved for summary judgment to set aside the nuptial agreement. Supreme Court denied the motion. On Candy’s appeal, a majority of the Appellate Division reversed and concluded that because Jack’s signature had not been contemporaneously acknowledged and the parties had not reaffirmed the agreement when the signature was acknowledged, the agreement was invalid and unenforceable. Two Justices would have held that, because DRL § 236(B)(3) was silent on this question, the Court was without authority to impose such requirements.

Jack appealed and contended that section 236(B) (3) required only that an agreement be signed and acknowledged in the manner required to record a deed, regardless of when that was done. In his view, there was no dispute that the nuptial agreement was acknowledged before the commencement of the divorce proceeding, and the acknowledgment complied with the statutory requirements. In response, Candy asserted that the acknowledgment was ineffective;  an unacknowledged nuptial agreement was not valid; and section 236(B)(3) recognized no exceptions to its requirements. And further argued that requiring contemporaneous acknowledgment placed couples and their legal advisors on clear notice of the prerequisites to ensure a valid nuptial agreement.

A court is not at liberty to permit a post hoc remedy to an unacknowledged nuptial agreement. The legislature expressed the mandatory nature of the acknowledgment requirement by the unambiguous statutory language of section 236(B)(3), its history, and related statutory provisions. Moreover, the acknowledgment requirement is onerous and more exacting than the burden imposed when a deed is signed because, unlike an unrecordable, unacknowledged deed, which may be enforced against the grantor and grantee, an unacknowledged nuptial agreement is unenforceable against the parties to the agreement, even when the parties acknowledge that the signatures are authentic and the agreement was not tainted by fraud or duress.

While the complete absence of an acknowledged signature is a fatal defect rendering a nuptial agreement ineffective and unenforceable, section 236(B)(3) and the Real Property Law do not specify when the requisite acknowledgment must be made in relation to the party’s signature. It was therefore unclear whether acknowledgment must be contemporaneous with the signing of the agreement. That question was squarely presented in Anderson.

But that statutory silence was not dispositive of the timing question. Given the purpose of the signing and acknowledgment requirements, the DRL’s obvious spirit and the intent were understood by the Court of Appeals to require an acknowledgment that was reasonably close temporally to the period when the signing parties had considered the consequences of the nuptial agreement and decided to be bound by its terms. The affirmation solemnized the consequences of signing the nuptial agreement. Thus, a rule recognizing a reasonable time frame for compliance with the acknowledgment requirement furthered that purpose. Because a nuptial agreement was not enforceable until both parties had signed and their signatures had been duly acknowledged, a significant delay between a signature and acknowledgment called into question whether there was a shared understanding of the relevant circumstances.

The Court, therefore, held that an acknowledgment must be executed contemporaneously, although not necessarily simultaneously, with the party’s signing of the agreement. Otherwise, the document must be treated as legally and functionally unacknowledged. Requiring that signatures and acknowledgments be formalized within a reasonable time period did not force an acknowledgment to occur at the moment that a party signed the document or at the same time the other party signed and acknowledged the document. While necessary to effectuate the legislative purposes of the acknowledgment requirement, that approach did not preclude execution in counterparts and accounts for a reasonable delay between signing and acknowledgment, which might be occasioned by circumstances unrelated to a party’s knowing delay or intent to gain leverage over the other party. For example, a brief lapse in time between the signing and the acknowledgment before a notary or other official is reasonable when the official is not immediately available, such as during holidays and vacations, or a party suffers from an illness or is unable to obtain time off from work.

A document that depends on an untimely acknowledgment is the legal and functional equivalent of an unacknowledged document. However, in a case involving such a document, the parties are not without a remedy. When there is an excessive delay rendering an acknowledgment ineffective and the agreement therefore unenforceable, the parties are free to reaffirm their agreement, again based on the information available to them at that time. To comply with section 236(B)(3), reaffirmation would require that both parties must again sign and acknowledge the agreement. The rule thus places the parties on a fair and equal footing in deciding whether to be bound by the agreement—either initially or at some future date if the agreement is unenforceable because of the delay.

Contrary to Jack’s claims, that rule was not at odds with the statute. Adopting the rule advocated by Jack would encourage a party to withhold acknowledgment and would allow that party to wait until they could reassess the terms based on changed economic standing and unanticipated events. Permitting Jack’s unreasonably delayed commitment would be at odds with the purpose of an antenuptial agreement under which both parties consider terms that are designed based on their respective personal and professional lives at the time of execution and their predictions of their future together, and not on actual events that transpire years into the marriage, including later economic success or failure.

And the Court was not persuaded by Jack’s argument that a temporal limitation was unworkable and created confusion. In those cases where an acknowledgment was challenged as too late to be compliant with section 236(B)(3), and the parties had not reaffirmed the agreement, resolution of the challenge required the same exercise of judicial decisionmaking as with any other disputed issue presented to a court. In such cases, a court might consider, as relevant factors in its determination the length of the delay, whether the signer or a third party caused the delay, and whether the signer was motivated to comply with the statutory mandates because of changed circumstances in the marriage or impending divorce action. Those factors were not exhaustive, but represented the type of considerations that evinced a strategic or unreasonable delay rather than delay due to unintended circumstances.

Applying the rule to the facts of Anderson, at the time the parties attempted to execute their nuptial agreement—the month after their marriage—only Candy had signed and had her signature acknowledged by a notary public. Jack did not have his signature acknowledged until after Candy informed him that she was filing for divorce, and shortly before he made it to the courthouse before her to file his own divorce action. Thus, when the parties considered the weighty personal choices to relinquish significant property or inheritance rights and the various issues concerning familial arrangements based on what they knew one month into their marriage, only Candy had gone through the formalities that she believed bound her. By failing to timely acknowledge his signature, Jack was able to revisit the agreement years later and thereby delay his decision whether to be bound by it, a decision he was then able to make with the benefit of hindsight and full knowledge of the parties’ respective economic positions shortly before filing for divorce.

Indeed, by retaining unilateral power to validate the agreement years later if he so chose, Jack sought the benefit of what he and Candy did not bargain for—an option without time limit and which he alone could exercise, including shortly before the commencement of a divorce action. Put another way, while Candy believed she was entering into a contract based on a shared understanding of the relevant facts, that understanding was essentially lacking as the circumstances were quite different seven years later when Jack finally attempted to formalize the agreement by acknowledging his signature. Thus, it was evident that one of the purposes of the acknowledgment requirement—to impose a measure of deliberation and impress upon the signer the significance of the document—had not been fulfilled.

Under those circumstances, the acknowledgment failed to comply with the requirements of section 236(B)(3). And the Appellate Division properly concluded that the nuptial agreement was invalid and unenforceable and that Candy was entitled to summary judgment.

Irene and William Koegel executed a nuptial agreement approximately one month before their marriage. The agreement provided that neither party would claim any part of the other’s estate and that they both waived their respective elective or statutory share. They further confirmed that they entered the agreement with knowledge of the approximate extent and probable value of the estate of the other. Both parties signed the agreement, and their signatures were acknowledged—in the case of Irene by her lawyer and in the case of William by his law firm partner. The certificates of acknowledgment followed the statutory requirements in all but one respect: both lawyers failed to attest that the signer was known to them, although that was undeniably the case.

William passed away during the marriage. His son John filed a petition to probate William’s last will and testament, which provided that the parties had entered the antenuptial agreement, that “[t]he bequests to and other dispositions for the benefit of [Irene] contained in this Will [we]re made by [him] in recognition of and notwithstanding said antenuptial agreement,” and that the will controlled in case of any inconsistencies, but in all other respects the “antenuptial agreement shall be unaffected by this Will.”

Irene invoked her surviving spouse elective share pursuant to Estates, Powers, and Trusts Law Section 5-1.1-A. In turn, as executor of William’s estate, John filed a petition to invalidate Irene’s election and for a declaration that she was not entitled to the statutory share based, in part, on her express waiver of her elective rights in the antenuptial agreement. Irene objected and responded that, although she had signed the agreement and acknowledged her signature before a lawyer known to her based on his prior representation of her in an unrelated matter, neither her nor William’s signature was acknowledged in accordance with the statutory requirements. Therefore, the agreement was unenforceable, and Irene was entitled to her elective share. Irene also moved to dismiss the petition to set aside her notice of election .

In support of his opposition to Irene’s motion, John argued that the antenuptial agreement complied with the then-applicable section 5-1.1 requirements and substantially complied with the other relevant statutory mandates. He also submitted separate written affirmations from the lawyers who had acknowledged the signing. Irene’s lawyer stated that he recalled taking her acknowledgment of her signature and that she did not need to provide proof of identification because she was known to him at the time based on their prior professional relationship; William’s lawyer stated the same with respect to William and his signature, and also explained the basis of his professional knowledge of William’s identity.

Surrogate’s Court denied Irene’s motion. On appeal, the Appellate Division upheld the decision of Surrogate’s Court and concluded that the defect here could be and was cured by the Executor’s submissions. Surrogate’s Court thereafter granted John’s motion for summary judgment, and the Appellate Division affirmed. Irene appealed to the Court of Appeals.

In support of her claim that the waiver of her elective share set forth in the antenuptial agreement was unenforceable, Irene argued that the certificate of acknowledgment was materially defective because the acknowledgment omitted mandatory language attesting that the notary public knew the signer or ascertained through some form of proof that the signer was the person described. According to Irene, there was no legislative authorization to permit a cure of minor or technical defects, let alone a material defect. John countered that extrinsic evidence should be admissible to show that the prerequisites of an acknowledgment occurred, but the certificate simply failed to reflect that fact– and such was the case here as established by his proof.

EPTL 5-1.1-A provides that the waiver of the surviving spouse’s elective share must “be in writing and subscribed by the maker thereof, and acknowledged or proved in the manner required by the laws of this state for the recording of a conveyance of real property”. Unlike Anderson, Koegel involved defective written certificates of acknowledgment. The Court of Appeals previously stated that “New York courts have long held that an acknowledgment that fails to include a certification . . . is defective”. Resolution of Irene’s appeal required the Court to answer the question whether a defective acknowledgment may be overcome by proof of the occurrence of the events anticipated by the statutory mandates.

The Court held that the defect presented in the appeal could be overcome with adequate evidence that the statutory requirements were met, even if the acknowledgment was not properly documented in the first instance. That limited remedy avoided invalidating a nuptial agreement when the parties had done all that the law requires of them. In other words, the signature and acknowledgment may satisfy the statutory mandates if extrinsic evidence supports that the acknowledgment was properly made in the first instance, even if the certificate fails to include the proper language due to the notary’s or other official’s error .

Permitting the parties to overcome this defect was not prohibited by the DRL, and, further the legislative purpose behind New York’s nuptial agreement formalities by holding parties to their agreements when they signed and had their signature acknowledged before a person who knew them or who had proof of their identification. That did not devalue the certification requirement, nor will parties be able to avoid the statutory mandates. Only in those limited cases where the parties signed and properly acknowledged the agreement could they later seek to present evidence of their prior timely compliance.

Here, Irene’s and William’s respective acknowledgments were defective, as opposed to absent. The affidavits of the notaries who actually witnessed the signatures—which were not rebutted—showed that the parties’ attempt to comply with the acknowledgment requirement was defective due to no fault of their own. And the signatories did everything they were supposed to do and complied with the formalities, even though the acknowledgment certificates failed to articulate that compliance in writing. Here, allowing proof of the personal knowledge of the signers merely allowed John to conform the certificate to reflect the fact of the actual events. Since Irene admitted that the lawyer to whom she acknowledged her signature was known to her because he had previously represented her, and the lawyer’s affidavit confirmed that she was known to him based on their professional relationship, the evidence overcame the non-compliance with the statutory mandates. Therefore, the nuptial agreement was enforceable as was ‘Irene’s waiver of her elective share.

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