To solve any dispute, negotiating and getting a mutual agreement is much better. This article is a brief description to know about Property Settlement Agreement.
A settlement agreement is a legal contract with outlines of dispute resolutions. In disputes, the two parties can negotiate first. Then after reaching a mutual agreement on the dispute, both parties can create a settlement agreement.
These settlement agreements are common in divorce, marital, employment, property, etc. These agreements save the cost and time which can go into the court trials and legal process. But after completion of the agreement, it needs to be approved by a judge. If you want to know about the Property Settlement Agreement, then read the article till the end.
What is a Property Settlement Agreement?
A Property Settlement Agreement is also known as a marital or divorce settlement agreement. PSA is a legal contract that outlines the distribution of property among the ex-spouses. It mentions the distribution of assets and debts.
In most cases, the property which needs to be divided by the spouse is the marital home. But, it can also include other residential property and investments.
How is a Property Settlement Agreement created?
There is a whole process for creating a Property Settlement Agreement. These steps are necessary to follow so that no offence can occur later. Those steps are mentioned below:
- Negotiation: As the name suggests, the two parties must negotiate in the first stage. The two parties should sit together and discuss the property distribution. Then both of them must agree on each distribution resolution. This can be done in an informal method or through mediation. Mediation should involve a specialist mediator who is independent of both parties.
- Agreement: At the end of the negotiation, when both parties reach a mutual agreement for property distribution, all things need to be written down on an agreement paper. All the resolutions and details need to be mentioned appropriately. This agreement should be drafted by an expert lawyer so that it does not create any dispute in future. All the distributed property and assets are included in the agreement.
- Consent Order: After creating the agreement and signatures of both parties, it needs to be converted into a consent order. This will make the agreement to be enforceable.
If both the parties do not come to a mutual agreement, i.e., they have disputes on some financial asset or property. In this case, they have to solve this matter in court. With divorce trials in court, the judge will also look over property settlements.
In the beginning, the court will take the property distribution ratio as 50:50. And as the case proceeds, all the important factors will be reviewed, and the ratio of the property will be updated. If they have any child under the age of 18, then their welfare will also be ensured by the court. The following factors are considered while the property is distributed among the divorcing parties.
- Income, earning sources and capabilities, property and other sources of finance that both the parties have or can have in the foreseeable future.
- Financial needs, responsibilities and obligations that both the parties have towards the marriage or can have in future.
- Both the parties’ standard of living and lifestyles were enjoyed before the divorce.
- Age of both the spouses and also the duration of their marriage.
In the end, the court will decide on a divorce order. This order will also include how the property will be distributed among the ex-spouses.
What needs to be mentioned in a Property Settlement Agreement?
It will include all the details related to property distribution. Following are a few points in which the distribution methods can be expressed.
- Selling Up: This includes the property which is going to be sold. The property should be in the marital pot. All the benefits from selling the property are going to be divided between both parties. This point can be used for such assets, which both the parties do not want to keep but want the monetary benefits from the asset.
- Buying Up: At this point, the distribution is mentioned, where one party buys all the property’s equity or takes the 100% mortgage. If a party does not want any property or vice versa, the other party can buy the property or completely mortgage it.
- Maintenance payments: One party can leave property under the other party. But if they keep paying their part of the mortgage, those things should be properly mentioned in the agreement. This point should also mention the time duration for which the mortgage has to be paid by one party.
- Transfer of Ownership: If some properties are mortgage-free, then the property can be included in the overall finance affairs, distributed among both parties.
Involvement of the third party
As the settlement is between two parties, i.e., both spouses must settle their matters. If you and your spouse have a joint account, you are also dividing it. Then remember to stipulate before that any debt on the second party is not a liability for you. If any problem occurs, you are free to take legal action.
This will protect you from getting into endless problems.
What will be the role of the Attorney in the Property Settlement Agreement?
As a legal matter, the presence of an attorney from your side is essential. Even if the settlement agreement is created and drafted by the lawyer of your ex’s spouse, your lawyer should also check all the documents before your signature.
Remember that the agreement is the final legal contract registered only after you sign it. If you do not agree with some points in the agreement or want to change something else, then you should not sign over an agreement paper. Because after signature, your agreement is approved by you, and you can’t disobey its rules.
Conclusion:-
All the settlement agreements are very useful in the situation of disputes. If these disputes go into court, the case will cost you a lot of time, peace of mind, and real money. If both the parties can reach a mutual conclusion, the agreement can easily let the disputes end with the legal contract. For more such readings, you can prefer Vakilsearch. And this is all about the Property Settlement Agreement.
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