These Are The Terms Missing From Your Contract

Mediate This! Podcast:

Hi, my name is Sydney Mitchell. Hi, I’m Matthew Brickman, Florida Supreme court mediator. Welcome to the Mediate This! Podcast where we discuss everything mediation and conflict resolution.

(00:13):
I recently had a mediation, um, where it was a modification of a prior agreement. And here was the question, here was the issue that we had at hand. So, um, it was a divorce and uh, there were attorneys involved. There was a mediator who was involved as well. Um, and, uh, it was a divorce. They created a settlement agreement. Um, it is now a year later. And, um, I was called in to try to mediate between the parties. They wanted me to mediate without attorneys. And what was at issue was there were terms that were outlined in their agreement, but they failed to have timelines inserted into what was negotiated in order to have performance done in a, uh, expeditious manner. And so, um, lemme give you an example of, uh, what was being done. So whenever I am mediating and somebody has, say, a home or property that they are needing to sell, we will build in all of the terms that are necessary in order to make sure that you know who is paying the home until it is refinanced or an assumption of a mortgage or sold.

(01:52):
Who has temporary exclusive use and possession of the home during that time? Are the parties still living together? So nobody has excuse, temporary, exclusive use possession? Um, we may put then the terms that, um, you know, that say for example, the wife is going to apply to assume or refinance the mortgage within a certain period of time, and then the closing has to happen within a certain period of time, and then we build in. But what happens if it happens and if it doesn’t? So if she is able to do that, then she’s going to owe the husband his equity interest. We then define how is equity interest determined? So if it’s an assumption of a mortgage or a refinance, then usually it’s the bank that’s coming in and saying, Hey, this is what we value the home. ’cause it’s the bank that’s actually going to be lending the money.

(02:52):
So we would say it will be, you know, the value assessed from the bank, less the mortgage owed on the property results. Then in the equity, you divide that by two. That then is how equity is established. Then we build in that, you know, at closing, then the husband would be entitled to X amount of dollars, um, whatever that number is. We don’t know what that number is in mediation unless the parties come in and say, look, this is exactly what the bank says. This is what we owe. We’re gonna be doing this with, you know, within 30 days before these numbers change. But I’ve never had that. So we just build in the process and then it is what it is. We then also say, okay, well in the event then that, that happens, well then at that time, the husband will execute a quick claim deed at closing, cooperate with execution of documents, and then the wife will be awarded the property is her sole property in this disillusioned action.

(03:57):
She’ll have exclusive used possession of the home at that time. Okay, great. But then we build in, all right, if the wife is unable to assume the mortgage or refinance to get the husband’s name off the mortgage and or pay the husband his equity interest, then the home shall be listed for sale. We put the timeline, say for example, within five days of receiving notice that she’s been denied the ability to assume or refinance. And then we put that they will sell it in accordance with the, uh, private terms of sale contract. Now, a private term sale contract is one that we create mediation, but it is not filed with the court because we do not want, uh, a potential buyer seeing what those terms look like. And so then that document then is held privately by the parties. And again, in the mediation agreement, it says that document is gonna be held privately by the parties.

(04:59):
So in that document, then we put, okay, this is the property. We name the property, put the address. We then also say that if the wife is unable to assume the mortgage or refinance to buy the husband out of his equity interest in the home, then the home shall be listed as outlined in the mediation agreement. And so we reference both backwards and forwards. Then we put, okay, who’s listing the home? It’s a licensed real estate agent. We’ll either name them or it’s mutually agreed upon, or we put whatever process is there in order for the parties to then be able to list the home and get a real estate agent. We put that it’s gonna be listed for fair market value unless the parties otherwise agree. The real estate agent is going to inform both parties of all showings and listings. Both parties will execute a listing agreement and it’s going to remain until the home is sold.

(05:58):
Um, so we build in these terms. We then say that for every 30 days that the home is on the market and not selling, then they will reduce the sales price by 2%. That, of course, is why we do not put this as public record in their divorce so that it is kept privately. ’cause we don’t want any potential buyer just sitting back and waiting, waiting, waiting as the price keeps coming down. And so that also gives the real estate agent incentive to sell and not just be lackadaisical on, uh, on showings, uh, and whatnot. Because every 30 days, if the price reduces by 2%, they’re losing commission. So that’s sort of a win-win for everybody. Then we talk about how then the net equity is going to be changed. We’re gonna put that the, that both the parties are going to accept any bonafide traditional offer within 1%.

(06:49):
We’re gonna talk about then the capital gains exemption, the homestead portability exemption. We’re gonna talk about no one further encumbering the property or following the reasonable recommendations for the real estate agent to sell the property. We talk about keeping the home in show condition, possibly a lockbox. And so this is where we have a, the terms for the performance, and we do not, what we don’t want is we don’t wanna just say, Hey, they’re gonna sell the property and split the net proceeds and not have any timelines in the agreement because like, okay, when are they gonna list it? How is it done? And if the agreement does not say, well, then that can be a problem. And that is exactly what I was dealing with with the couple that came back to me was they had their agreement written by, uh, a mediator and two attorneys.

(07:43):
Now I have to say it was a mediator attorney. It was not just a mediator, it was an attorney mediator. Um, so in essence, they had three attorneys sitting at the table, um, one of ’em acting as a neutral, uh, facilitator, but they had three attorneys sitting at the table. Somebody, in my opinion, somebody should have done this, but they didn’t. And so this contract was lacking performance timelines, all the things that I just spoke about. And so what happened is we are now, a year later, performance is still not done. Motions for contempt enforcement have been filed, but okay, contempt for what? You can’t say there’s a lack of performance when there’s no timelines that are there for completion and no steps actually outlined. And so the question was, okay, well can we come back and put these terms into the agreement or can, can a judge put them in?

(08:46):
Well, this is a contract and a contract. The only way a contract can be changed is if the two people that created the contract agree to the change. Um, and that’s about it, like even a judge. And, and, um, and you may need to get your own legal advice for your particular case. I, I, I do not give legal advice, but I, in 18 years of mediating and writing contracts, and I’ve done over 3,100 mediations at the time of this recording, um, I’ve never seen a judge that is able to come and rewrite a contract because it was lacking terms. Uh, they can’t just come in and just change a contract. Uh, they don’t have that kind of power. It’s contract law. And so, you know, if, if the, if in this case, if the husband and the wife came to me and said, Hey, we, we understand that we had three, uh, basically three attorneys, we do not have performance and we want performance in there, then fine, we’ll do an addendum, add all of the performance language, and we can actually fix the agreement.

(09:55):
If one of the parties wants to add timelines and the other does not, well then it’s up to a judge. And again, can a judge go in and just start inserting terms into a contract? I don’t believe that they can. But, um, that is why it is really, really, really important that when you are at mediation, you are asking all of the questions. You are looking at all of the possibilities. Um, I’ve always said that I really wish people would treat, uh, negotiations or even treat their own life a lot like an Excel spreadsheet, always asking yourself if this, then what if that, then what if that, then this and you go back and forth and try to figure out all the possible scenarios. As a mediator, I am trained to look at all the potential angles, possibilities, scenarios, um, even look outside the box and say, Hey, how, how can we maybe create something brand new for your family that’s never been done?

(10:57):
Um, and so I’m always exploring different ideas in order to help people reach a resolution. But there are standard practice that I always use as I’ve explained with putting in the timelines of performance. If this, then that having a private sales agreement, um, because what I want to do as a mediator and what I, um, would hope other mediators would do is my job as I look at it, is to give people tools so that they can be successful and move through their, uh, contract and their agreements to achieve the goals that are being negotiated that they want. What I don’t want is I don’t want people having to argue and fight and file motions and hire attorneys and come back to mediation and waste needlessly waste time and money when it can all be done correctly from the beginning. So, um, my advice to people, not legal advice, but my human advice to people is I’ve put, um, a couple of years worth of podcasts together.

(12:07):
And if you’re hearing this podcast for the first time and you’ve got questions about selling properties and marital settlement agreements, parenting plans, I’ve been podcasting many, many episodes and I I really highly advise you to go back and listen to the individual episodes. You will gain lots and lots of knowledge and listen to these before you get into mediation. That way you’re asking the right questions, you’re looking for all the potential solutions, and you’re not just surrendering all decision to either a judge to decide or even surrendering that to. Um, and, and this particular couple’s case, three attorneys sitting at the table that still missed the terms that should have been there. Now, whether they missed them accidentally or intentionally left them out so that it would cause the people to have to come back to them for clarity, for fighting, for motions, for contempt.

(13:06):
I do not know, I don’t know the attorneys and the mediator, I don’t know what their intent was, but I do know that whether it was intentional or accidental, it totally set this couple up and now they’re fighting and unfortunately it is impeding on their ability to co-parent because, um, the things outlined in the settlement agreement are not, uh, clear. And so if they’re arguing about money, it’s gonna hurt when it comes to timesharing. So, um, it’s very, very important to get your timelines and terms done properly the first time because it can really wreck havoc on your life and you may never get those terms added, which can be a huge problem, uh, going forward.

Matthew Brickman:
Occasionally Sydney and I will be releasing Q&A bonus episodes where we’ll answer your questions and give you a personal shoutout.

Sydney Mitchell:
If you have a comment or question regarding anything that we discuss, email us at info@ichatmediation.com that’s info@ichatmediation.com and stay tuned to hear your shout out and have your question answered here on the show.

Matthew Brickman:

For more information about my services or to schedule your mediation with me, either in person or using my iChatMediation Virtual Platform built by Cisco Communications. Visit me online at www.iMediateInc.com. Call me at 561-262-9121, Toll-Free at 877-822-1479 or email me at MBrickman@iChatMediation.com.