Loar v. Loar (2020) & Knowing Your Rights under a Separation Agreement

Published on
November 1, 2024
Written by
Angel Murphy, Esq
Category
Divorce

As we have discussed on multiple occasions, in many ways marital agreements are treated much the same as other contracts. When a marital agreement is viewed and analyzed by a Maryland court, that court will quite literally analyze the marital agreement in a very similar manner as it would a non-marital contractual agreement, such as a loan agreement or service contract. This is because many of the principles which govern non-marital agreements are directly applicable to marital agreements. For example, one principle governing all Maryland contracts is the expectation for “reasonable behavior” from the parties involved. Parties are expected to act “reasonably” in how they approach and fulfill their obligations within a contractual agreement, and they are expected to act in “good faith.” When a party acts in an unreasonable manner, or acts in bad faith, that party can end up losing a given battle, and this is true even if that party didn’t violate any particular technical provisions of the contract itself.

The case of Loar v. Loar (2020) is a relatively recent case which illustrates the principle of “good faith” and reasonable behavior in a marital agreement context. Let’s examine this case in detail to see how this principle works more clearly.

Overview of the Case Facts

The couple in this case were both “horse lovers,” as the husband was a horse veterinarian and the wife was a professional horse riding trainer. Together, the couple owned a farm, and during the divorce a marital agreement was developed which included a reference to how the farm might be handled as part of property division. Specifically, the agreement provided four distinct ways in which the farm might be handled: the wife could buy out the husband; or, if the wife didn’t choose to buy, the husband could buy out the wife; or, if neither spouse wished to buy out the other, the farm could be sold by a real estate agent; or, the farm could simply be sold as part of a court-ordered sale.

The wife made it clear that she wanted to buy out the husband’s interest in the farm, and the husband accepted. However, in order for the sale to go through, the wife needed a formal appraisal conducted by a professional. The husband was tasked with hiring a reputable appraiser and conducting the assessment. The husband failed to deliver the appraisal by the deadline; he ended up sending the appraisal to the wife, through his attorney, 4 days after the deadline had passed. Subsequently, the husband began researching a real estate agent to sell the farm, as he believed that the wife’s opportunity to buy the farm had expired per the terms of the marital agreement.

The husband’s position succeeded at trial, as the trial court concluded that the wife had actually “failed” to exercise her purchase option in a timely fashion. The wife then appealed.

Outcome & Discussion

On appeal, the appellate division ruled that the husband had not acted in accordance with Maryland’s “reasonable party” standard in his refusal to send the appraisal in a timely manner. Holding that the wife failed to exercise her option in time was clearly erroneous as the appraisal was a necessary condition of the sale itself. The husband had obviously delayed the appraisal in order to unreasonably force the wife out of the sale. Under these circumstances, the law generally doesn’t allow the party who acted unreasonably to succeed in their goal. This is true even when the party acting unreasonably doesn’t violate a specific provision or technical requirement, as was the case here. Fulfilling the appraisal by the deadline wasn’t a contractual matter, but instead a normal part of conducting this type of sale; even though the husband hadn’t actually violated the contract, he still acted unreasonably according to an objective standard when he failed to provide the appraisal on time. Because of this, the appellate division overturned the trial court’s decision and ordered the original sale to go through.

Contact the Murphy Law Firm for More Information

If you want to know more about separation agreements, property division, or another related matter, connect with one of the family law attorneys at the Murphy Law Firm today by calling 240-219-5243.

Angel Murphy

Personable. Passionate. Persistent.

Marital Agreements | Contract Law | Good Faith | Reasonable Behavior | Loar v. Loar | Maryland Family Law | Property Division | Divorce Agreements | Appraisal Requirements | Legal Standards

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