A recent Supreme Court decision in Sachau v. Sachau, 206 N.J. 1 (2011), highlights the impact of silence on key terms involving real estate in property settlement agreements (PSAs). Sachau centers on a PSA that was incorporated into the parties’ final judgment of divorce. The PSA, which was executed in 1979, provided that the marital residence would be held jointly by the parties until it was sold. Moreover, Ms. Sachau and the two children would be entitled to reside there until the youngest child reached 18. At that time, the PSA further stated, the house would be appraised and listed for sale within 30 days. Upon sale of the house, Mr. Sachau would receive $15,000, Mrs. Sachau would receive $10,000, with the remainder split evenly between them. The PSA failed to address, however, the amount to be divided if no action were taken by the parties to sell the house within 30 days. This in fact is exactly how the scenario played itself out.
In 1984, the parties’ youngest child reached age eighteen, triggering the sale provision in the PSA. For the next 22 years, however, no action was taken by either party. In 1984, Mr. Sachau filed a motion to require the sale of the home and division of the proceeds in accordance with the terms of the PSA. One major issue the court had to determine was the value of the home in the absence of an agreed upon price. On remand, the trial judge ruled that the amount to be divided was to be based on the 1984 value of the home, which was $120,000, plus interest for the 22 subsequent years. This decision was pursuant to Pacifico v. Pacifico, a case in which the court ruled that “Where the sale of a marital asset is to abide a future event…current market value as of the time of the triggering event is presumed.” After an appeal by Mr. Sachau, the Appellate Division affirmed the decision of the lower court. In 2007, Mr. Sachau filed a petition for certification and the Supreme Court granted same.
In a unanimous ruling, the Supreme Court held that where the PSA was silent on the issue of the value to be ascribed to the marital residence in the event that it is not sold upon the triggering event, it should be valued as of the date of sale. Thus, in Sachau, the proper valuation date was 2007, not 1984, overturning the ruling upheld by the two lower courts. The court ruled that Pacifico v. Pacifico only states that current market value as of the trigger date is used if the sale takes place at the trigger date. In Sachau, however, twenty three years transpired beyond the trigger date. To read entire case click here Sachau v Sachau NJ Divorce case