With respect to real property transactions, understanding contracts is a daily challenge. Whether it is a listing agreement, an “As Is” agreement, or even a warranty deed, contracts are at the heart of what real estate agents deal with (outside of the actual clients.) On occasion, non-real estate contracts will creep into a transaction and it is just as important to have a working knowledge about these agreements and their potential impact upon a closing. One such type of contract is a “Nuptial Agreement.” Understanding these kind of collateral agreements is integral in strategizing on what needs to be done to ensure clear title when a property is sold by a married couple having one of these agreements.
Marriage between two people is founded on love, respect, trust…and sometimes a deep desire to keep each other’s personal and real property separate from each other. There are a myriad of reasons why a couple who are about to get married want to have an agreement to specifically identify, and keep separate, certain property, such as protecting children from a previous relationship, estate planning, inheritance, trust proceeds, or just an accumulation of wealth. Similarly, after marriage, a couple may want to carve out certain assets from each other for similar reasons. Florida does recognize both pre-nuptial (also known as ante-nuptial) and post-nuptial agreements. However, the legal standard for enforceability of a pre-nuptial agreement is very different than that of a post-nuptial agreement. The importance of this for the drafter and when it is sought to be enforced or interpreted, is whether there was open, complete, and accurate disclosure done between the parties prior to the execution of the agreement.
This is especially true in Florida with its constitutionally protected homestead rights. With Florida’s homestead rights, any ante-nuptial or post-nuptial agreement must be reviewed carefully to see if either party effectively waived any rights, interest, or claim to the other’s protected homestead property. A blanket waiver in one of these agreements, such as, “all real property in Party One’s name remains the sole possession of Party One” will not be sufficient to effectively waive such a constitutionally protected right and will still require BOTH parties to sign any necessary closing documents to effectively transfer title.
Likewise, if a married couple is purchasing a piece of real property with one of these agreements in place and only one party seeks to have their individual name on the title without the spouse, the agreement will have to be carefully reviewed to ensure how the title is prepared. While non-homestead property is not afforded the same protections, similar inquiries will need to be done, such as, how is property currently titled if it is being sold by the married couple or how is going to be titled if it is being purchased by one of the spouses individually.
As Florida does not have “legal separation,” if a married couple is seeking to own two separate homes with two separate homesteads, Florida law has carved out the possibility of this to occur. The Florida Constitution establishes a homestead exemption for every person who has title to real estate that they make their permanent residence. However, each person or “family unit” can have only one homestead exemption. The issue is what constitutes a “family unit?” Simply being a married couple may not necessarily rise to the level of a “family unit.” While there may be a presumption that a married couple is a “family unit,” some courts have found that if a married couple can establish that, although married, each spouse to the marriage lives separate and apart with no interaction and no connections between each other emotionally or financially, it would be illogical to call such a marriage a “family unit.” As such, it will be up to the drafter of the post-nuptial agreement to clearly identify the financial independence of each of the spouse from each other.
Ante-nuptial and post-nuptial agreements are interpreted just like any other contract, so, just like a real estate contract, you should familiarize yourself with the language of the agreement and the meaning of the terms contained in the agreement. As a realtor, you need to make sure when you are representing married couples that you ask about whether the couple has any such agreement so you can be prepared to have the closing agent address issues such as how to title property or homestead exemptions. As always, if you have any questions about how a pre-nuptial or post-nuptial agreement can affect a real estate closing, please consult with a qualified local real estate attorney.
Berlin Patten Ebling, PLLC
Article Authored by Mark Mann, Esq., firstname.lastname@example.org
This communication is not intended to establish an attorney client relationship, and to the extent anything contained herein could be construed as legal advice or guidance, you are strongly encouraged to consult with your own attorney before relying upon any information contained herein.
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