To have a better understanding of what occurs when the terms of a property settlement agreement are violated, it is helpful to know exactly what a property settlement agreement is first. 

A property settlement agreement (commonly referred to as a marital or divorce settlement agreement), is a written agreement between two spouses. It defines how property and assets should be divided between the spouses by determining what items the couple obtained before or during the marriage.

Although property settlement agreements primarily focus on the division of property in the event of a divorce or legal separation, they sometimes include other issues. These commonly include alimony payments and child custody

Property settlement agreements can either be formed before the marriage (e.g., as a prenuptial document), or during the marriage (e.g., as a postnuptial document). Depending on the jurisdiction, the agreement may also be called a “property agreement,” “settlement agreement,” or “separation agreement.” Regardless of the name, they all refer to the same concept. 

Additionally, as mentioned above, settlement agreements are often classified under the category of “Spousal Agreement.” The term, “spousal agreement,” is much broader in scope, which is why these agreements may sometimes cover other subjects (aside from those relating to divorce).

How are Property Settlement Agreements Created?

Property settlement agreements operate similarly to a contract, especially in the way that they are enforced or modified. In order for a property settlement agreement to be valid, it must be in writing. Also, both spouses are required to disclose their financial resources and assets. 

Furthermore, the agreement must not encourage divorce and the couple must mutually agree on the terms it contains (i.e., the agreement cannot be formed under the circumstances of duress or coercion).

Ideally, a lawyer should be hired to prepare and review the terms of the agreement to ensure that it is fair, valid, and that you are not signing a legally binding document that gives away important rights. A lawyer may also need to be consulted because some jurisdictions require the approval of a court. 

What Happens If the Terms of a Property Settlement Agreement are Violated?

As previously stated, property settlement agreements are legally binding documents. Therefore, both spouses must honor the provisions in the agreement. The spouses are generally free to include whatever terms they find appropriate in the settlement agreement, just so long as they abide by them. 

If one of the spouses fails to honor the terms of the property settlement agreement, this action can result in legal penalties for the party who is in violation. 

For example, a court may order the violating party to hand over property that belongs to the non-violating party, as a type of punishment and remedy for the violation. In other instances, if the violation is severe enough, it can result in criminal penalties, such as fines. 

A common point of dispute, in regard to settlement agreements, is when one spouse conceals the existence of assets from the other spouse. Although a spouse is usually permitted to handle assets on their own and as they please (e.g., such as investing or making other financial improvements), property settlement agreements require that the independent-acting spouse to at least inform the other spouse of the existence of any such assets.

Another way that a settlement agreement can be violated is when one spouse falsifies information regarding their financial resources or assets. For example, a party may fraudulently overvalue or undervalue the estimated costs of a particular asset. Alternatively, they may falsify statements concerning the actual amount of money contained in an account.

These types of violations are considered to be serious offenses and can also give rise to criminal charges. 

How Does a Court Interpret Property Settlement Agreements?

If there is any dispute over the terms of the agreement, the court will attempt to determine the parties’ original intent, based on the specific language used in the written agreement. Much like a contract, this is because the writing provides the clearest evidence of the couple’s intent when they entered into the agreement.

Thus, it is important that property settlement agreements are drafted as clearly and concisely as possible, so as to avoid any misunderstandings. This is another reason why hiring a lawyer to prepare and review the property settlement agreement is often a great idea. 

Do I Need a Lawyer to Help Draft My Property Settlement Agreement?

If you decide to draft a property settlement agreement with your spouse, you should strongly consider hiring an attorney to draft and review the agreement. As discussed above, this is because once the agreement is signed, it becomes a legally binding document that can potentially have serious consequences, if violated.

Additionally, if any legal disputes arise over the terms of the agreement, a family attorney can help you negotiate settlements and provide you with guidance regarding the options available to resolve your dispute. If necessary, they can represent you in a court of law.