Category: Settle out of court

How a Contract Magically Becomes a Court Order: Incorporation

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In the world of family law in North Carolina, there are three ways to address agreements: contracts, court orders and incorporation.

Contracts

Contracts are agreements signed by the parties, such as a separation agreement. If someone violates the contract, it is called breach of contract. A contract is enforced by a “specific performance” lawsuit, asking the court for an order requiring him or her to perform the specifics of the contract, such as signing a deed, refinancing a mortgage obligation, etc. A contract generally can’t be changed by the court. However, the court always has the authority to change anything related to child custody and support until a child is 18 years of age, regardless of what the parties set out in a contract.

Court Orders

Court orders are only available after a lawsuit has been filed, and they must be signed by a judge to be valid. The best part about a court order is the remedy. A party who violates the court order is subject to being held in contempt of court for failure to obey the court order. The contempt power of the court gives the judge discretion to do whatever he or she sees fit to enforce the order, depending on the circumstances presented. Although they don’t usually do so until after someone demonstrates they will remain obstinate, judges have the authority to incarcerate someone who continues to disobey court order. Orders can be registered in any state to be enforced with the full faith and credit of another state.

Incorporation

Our state has what is called incorporation, a special process by which a separation agreement “magically” becomes a court order once a judge signs it. But a judge cannot sign anything until there has been a lawsuit filed. Incorporation is done only by agreement, which is usually mentioned in a separation agreement. After a full year of separation has passed, either spouse can file for a divorce. When the judge signs a divorce decree, he or she also has the authority to incorporate it into the decree, permanently making it an order of the court.

What is a Separation Agreement?

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A Separation Agreement and Property Settlement is a voluntary contract between a husband and wife of ex-spouses. It may be signed no sooner than separation, and may be signed at some later date, even after the parties divorce. The parties can settle some or all of the issues, including child custody, spousal support (alimony), child support, and division of marital property and debts (equitable distribution). The laws are written to encourage settlement instead of litigation. Therefore, a properly drafted separation agreement is extremely difficult to change or void.

What Things Can We Include in the Agreement?

Because they are contracts mutually agreed upon, separation agreements can include just about anything. One of my favorite war stories involved a case where we agreed on horse custody and visitation. We even included terms for which farm the horses would stay and whether each “horse parent” would be entitled to allow future romantic partners to ride the horses. That type of outcome will never happen in court. In our state, horses are legally treated as personal property no different than a television or set of china.

Express Lane: Is There a Form I Can Use?

Even some attorneys who don’t handle family law cases, or just  dabble in family law, do not realize there is no “boiler plate” form.  In fact, separation agreements are popular because they can be customized to whatever terms agreed upon by the parties. Imagine going to a mechanic and asking for “the standard repair.”  All cars have tires and a steering wheel, but a Corvette and a VW Bug don’t call for the same repairs.  It is no different with attorneys who draft separation agreements. Some are very complex, but others might not be.

While separation agreements do have certain magic words for the more routine things, such as jurisdiction of the court to interpret the agreement for example, a good attorney will address dozens of other issues specifically. For instance, the agreement might include a disclosure paragraph that dictates whether the parties are obligated to tell each other about hidden assets, inheritance rights, or address certain significant tax consequences.

Buyer’s Remorse: Enforcement

Separation agreements can be written to spell out the types of enforcement mechanisms that will be used if it is violated. The agreement may be treated like a contract, which is enforced by a lawsuit based on breach of contract. Other times, the agreement may be drafted to become a court order at some later date, enforced directly by the court. The agreement can say that violations will trigger certain consequences. Or, it may dictate when and how child custody and/or support lawsuits can be filed at some later date. All of these enforcement options are another example of ways attorneys draft agreements based on each client’s specific needs and priorities.