As always, before reading this post please review my disclaimer by following the link above or by clicking on this link. As always, any legal principles discussed apply only to the Commonwealth of Virginia.
Introduction
Having just returned from vacation, my work has been somewhat intense. I have some free time today, and tomorrow looks like I will have none, so today seems like the right day to do a blog post. Doing a blog post on short notice, however, usually winds up with an FAQ, but I realized that questions I have been getting about previous posts of mine have reached a sufficient quantity to warrant their own post.
So, today I will be answering questions that I have received by e-mail or comment about past blog posts - questions that I feel deserve an answer that everyone can see, but which do not warrant a full blog post on their own. Today's topics include: Landlord "self-help" in non-VRLTA leases, Security Deposits held past 45 days in VRLTA leases, diplomatic immunity clauses in leases, retaining payment records, and the impact of the new child support guidelines on existing orders.
So, sit back, relax, and learn from the questions raised by others!
"You have said (in fact, repeatedly) that landlords for residential leases cannot engage in 'self-help' by changing the locks on an unpaying tenant, but in fact have to get a court order before they can evict. However, I just saw an online article/received a written pamphlet saying a landlord can 'self-help' if their lease is not governed by the Virginia Residential Landlord and Tenant Act (VRLTA). Can you prove that you are right? And if so, do you know why the online article/pamphlet would say otherwise"
I've gotten this question a very large number of times, so I figured it was time to set the record straight. First of all, if you are new to my blog, it might be worthwhile to familiarize yourself with when the VRLTA does and does not apply.
The really short answer to the two questions is yes, and yes. The slightly less short answer to the first question is to look at Virginia Code Section 55-225.1. The slightly less short answer to the second questions is the online article or pamphlet was written before July 1, 2012 (or, possibly, before July 1, 1994).
Ok, so here's the longer answer. Under the common law, which is what applied to all residential leases before the VRLTA was adopted in the 1970's, and which still applies to all non-VRLTA residential leases today, a landlord was, in fact, allowed to self-help. A landlord could protect himself from potential liability by going to court first, and could also get the assistance of the sheriff's department by going to court first (for example, if the tenant was a risk for violence), but the landlord did not have to go court first. As you probably remember from civics, however, "common law" can be changed by statutes and legislation. The VRLTA was a big change to the common law for the leases it applied to. Nonetheless, for non-VRLTA leases, the common law remained (and still remains) the primary force influencing how these leases are governed.
Nonetheless, stories of abusive landlords became prevalent, and in 1994, the Virginia General Assembly passed Code Section 55-225.1, which made the default rule that a landlord couldn't self-help. So, end of story, right? Not quite. See, as I've mentioned several times before, the biggest difference between the VRLTA and the statutory laws that govern non-VRLTA leases is that the VRLTA makes invalid and unenforceable any part of a lease that waives tenants' rights under the VRLTA. Chapter 13 of Title 55 of the Code of Virginia, where most laws governing non-VRLTA residential leases are found, has no similar provision. So, even after the 1994 change, landlords were updating their leases to waive the applicability of Code Section 55-225.1. This meant that landlords still could "self-help" in a non-VRLTA residential lease, even after the 1994 change.
This changed in 2012. In 2012, the General Assembly amended Code Section 55-225.1 to add a sentence reading "A provision included in a rental agreement for a dwelling unit authorizing action prohibited by this section is unenforceable." As a result, since this law went into effect on July 1, 2012, all new residential leases entered into on or after that date which are not governed by the VRLTA cannot waive the protection of Code Section 55-225.1, thus residential landlords are now forbidden from ever engaging in "self-help."
"You said that a security deposit in a lease under the VRLTA must be returned in full if the landlord has failed to provide an itemized list of deductions within 45 days of the end of the lease. My landlord didn't give me an itemized list within 45 days, but I also know that there was enough damage to the property that the landlord would be able to keep almost all of my deposit. Is it worth pursuing getting the full amount back if my landlord can turn around and counter-sue me for the damage?"
This is actually a tricky question because the answer is not clear-cut. The VRLTA makes quite clear in Code Section 55-248.15:1 that failure to provide you with the itemized list (unless the failure was not the landlord's fault) within 45 days entitles you to a full refund of the deposit. The only exception listed is that if you have unpaid rent owed to the landlord, the amount refunded to you will be reduced by that amount. There is, however, also a provision that states "This section shall not preclude the landlord or tenant from recovering other damages to which he may be entitled under this chapter." To add to the confusion, all of this is basically located in one giant text paragraph in the Code.
So, in my experience, most judges interpret this section as follows: Since "this section" talks about damages from property damage, the "other damages" referred to does not include property damage. As a result, the failure to comply with the 45 day notice not only entitles you to a refund of the security deposit, but actually also waives the landlord's right to claim from you any property damage at all. This is, in my opinion, the only logical way to read this section - as the ability of the landlord to counter-sue for the property damage (or to sue you years later for it) would seem to defeat the whole purpose of the 45 day rule.
Nonetheless, the lack of clarity in the Code provision means I cannot say this with certainty. As a result, it likely is worth pursuing (especially since you are supposed to be reimbursed your reasonable attorneys' fees in such a case), but I cannot guarantee it.
"You said that a diplomat renting property cannot be forcibly evicted due to the applicability of diplomatic immunity. You further pointed out that a diplomat cannot waive diplomatic immunity - only his government can - and that a request to the government to waive the immunity of a dead-beat diplomat is likely to fail. I just handled a lease with a diplomat which includes a provision nullifying the lease if the diplomat does not provide the landlord with notice from his Embassy that his diplomatic immunity has been waived for this lease - it sounds great in theory, but considering your post, how am I going to enforce it? Once he moves in, aren't we stuck with him whether the lease is 'null' or not?"
Diplomatic immunity clauses like the one referenced above are very common in areas with large numbers of diplomats - especially in leases drawn up by professionals (I include them in every lease I draw up for a landlord client). But, considering my post about diplomats, how are these enforceable? Well, there are some important things to remember.
A diplomat requesting his own immunity be waived is very different from a spurned landlord making the same request. If the diplomat's securing the housing of his choice depends on it, the diplomat's government likely will grant the diplomat's request to waive his immunity.
The broader question, however, is how to enforce this clause. After all, as the questioner correctly notes, once the diplomat moves in, it's his home, inviolability kicks in, and he cannot be evicted no matter how "null" the lease now is. The answer, then, should be obvious - this provision is enforced before the tenant moves in. You do not "deliver possession," meaning you do not give the tenant the keys, access to the property, etc., until after the tenant has complied with this provision. This is because before the tenant moves in, it is not his home, there is no "inviolability," and you can keep the tenant off the property.
So, in other words, this is a pre-possession requirement. The lease is nullified if the condition is not met before the tenant ever moves in. That is how these provisions are enforced.
"You said that when you are accused of non-payment of something, the claim that you actually have paid is an affirmative defense and on the defendant to prove - thus meaning you should retain all records of payment. How long should I keep these records?"
So, the easy answer is to say "forever," but that's both unrealistic and probably foolish. The odds are you will never be challenged on a payment you made, so keeping stacks of paper is silly. My more practical recommendation is to follow the relevant statutes of limitations, and add a year. If your payment was due to a contract, keep your records of payment for six years. If your payment was due to a court judgment, keep your records for 21 years. Those are the two basic areas where non-payment gets challenged. If, however, your payment was due to some kind of injury you caused someone else, and you tried to compensate them in advance without having a settlement, keep those records also for at least six years.
In terms of child support and spousal support - unpaid child support and spousal support is treated as a judgment in Virginia. So, those payment records should also be retained for 21 years.
Also, get to know your bank's record retention policy. Many banks don't maintain statements for more than 5 to 7 years, so if you need to hold records for longer than that amount of time, get those statements in paper.
"You said that this year, the General Assembly has modified the child support guidelines. How does this effect child support orders already in effect on July 1, 2014?"
Child support orders already in effect will not be affected by the change - they remain in effect as is. That being said, the Virginia Court of Appeals has held that when laws like this change, if they would cause a "significant" change in support, then the change in law can be considered a "material change in circumstances" which allows either party to file a motion to get the child support modified. The word "significant" has never been defined by the court, but I think a reasonableness test would likely apply to whether or not something is significant. I will say that in early July I offered all of my current clients paying and receiving child support the opportunity to do a free recalculation of what their support would be under the new law (if the numbers used to calculate the existing order remained the same) to determine if it was worth filing a motion. The average recalculation I did showed a change of $3 per month (there are no 0's missing, that really is just the number three) and I had only one client show a potential change greater than 2%. With that in mind, I would not expect the new law to provide a material change of circumstances to most people. If, however, your case is one where the combined income of both parents was/is greater than $10,000 per month but less than $35,000 per month, that is where a significant change is most likely, since that area is where the biggest changes to the guidelines can be found.
Conclusion
I actually have a few more I'd love to cover, but this post is getting kind of long, so I will wrap it up here and maybe do a similar post in the future. As always, I welcome questions (and challenges!) either by e-mail or by comment to my blog posts - this truly has been an exercise I have greatly enjoyed. If you are interested in retaining my services, please feel free to call (703)281-0134 or e-mail SLeven@thebaldwinlawfirm.com to set up a consultation. Our initial consultations are free for up to half an hour!
Wednesday, August 13, 2014
Tuesday, August 12, 2014
Classic Law is Your Friend: Virginia's Prohibition on "Self-Help" for Landlords and Tenants
Today's Classic Blog Posts discuss the prohibition in Virginia on landlords and tenants using "self-help" (such as withholding rent, changing locks, etc.). It was originally posted on July 2, 2013 and titled "Changing the Locks, Withholding Rent and Other Mistakes - Your Lease, 'Self-Help' and the Law."
Where I felt it needed, I have added a few lines here and there. Additions that were not in the original blog post will be in brackets ([]).
As always, before reading this post, please review my disclaimer by following the link above or by clicking on this link. As always, legal principles discussed in this post are applicable only to the Commonwealth of Virginia.
Introduction
I cannot count the number of times I am called upon for a consultation or hear about a case in which the landlord or the tenant has committed some very egregious violations of the lease. I'm nodding along, interested in all the terrible things the other party has done, and then I get to the part I am afraid of. If it's a landlord, I hear "so I kicked them out and changed the locks." If it's a tenant, I hear "so I'm withholding rent until they fix it." That's when a potentially good case goes bad.
What I've referred to above is what we in the landlord/tenant world call "self-help." Self-help is when, instead of going through the courts, the aggrieved party simply takes matters into his or her own hands. It's faster, cheaper and easier than going through the courts, so it's no wonder that it's so appealing. And it works great - if the other party has no idea what their rights are, what the law is, and what remedies they may have available to them. If they do, though, then you've gone from being on the right side of the law to being on the wrong side, and it can cost you, big time.
This blog post will attempt to cover a little bit about the bad things that can happen to you if you try to "self-help," the one major exception to that rule, and a brief discussion of the correct process.
VRLTA vs. Common Law/Chapter 13 Leases
Regular readers of my blog will remember my post from some time ago covering the difference between leases under the Virginia Residential Landlord and Tenant Act (VRLTA) or leases under the Common Law or Chapter 13 of Title 55 of the Code of Virginia. As you may recall, while rights and remedies under VRLTA cannot be waived, most common law/chapter 13 rights can be waived in the lease. Astute readers, however, will notice that I mentioned that most rights under the common law/chapter 13 can be waived - the implication being that there are some that cannot. The right to have the court as a bulwark against abuse, and subsequently the prohibition on self-help, is generally not waivable in even a common law/chapter 13 lease. As a result, the rules in this post are equally applicable to VRLTA leases and common law/chapter 13 leases.
The Danger of Landlord Self-Help
If your tenant stops paying the rent, violates your lease, or otherwise causes trouble, and your response is to take possession of the property yourself, you could be in for a world of trouble. Your tenant can file suit and get a court to actually order you to give possession back. You will likely be charged money for the loss of use and "quiet enjoyment" of the property while the tenant was deprived of it. You will also likely be assessed the tenant's attorneys' fees. Finally, heaven help you if you did anything to the tenant's personal property.
In short, self-help as a landlord will likely end up costing you far more than whatever cost you would incur by waiting and following proper procedures. [It is important to note that, after being sued by the tenant, you could still turn around and have the tenant properly evicted from the property - you will still owe the tenant for your improper eviction, however, and you may very well have waived your right to retain any part of the security deposit.]
The Danger of Tenant Self-Help
The most common form of tenant self-help when the landlord violates the lease is to simply stop paying rent. Guess what - if you do that, you can still be evicted for non-payment of rent. You might ultimately not have to pay the rent that you withheld, but by going outside the proper channels you will likely be evicted, be assessed your landlord's attorneys' fees, and you may very well still have to pay that rent. Again, self-help will likely end up costing you far more than the cost of waiting and following proper procedures.
The Proper Procedures
As a landlord or tenant, there are proper legal procedures to take. As a landlord, there are three types of notices you must give first: 5 day pay or quit, 21/30 notice, or 30 day notice. The 5 day pay or quit is for non-payment of rent only. This gives the tenant 5 days to get paid in full or the lease terminates. The 21/30 notice is for a remediable breach of the lease which gives the tenant 21 days to fix the breach, or else the lease terminates 30 days following the notice. The 30 day notice is for a non-remediable breach which simply notifies the tenant that the lease will terminate after 30 days. If, under any of these notices, the lease does terminate and the tenant remains on the premises, you must file an Unlawful Detainer action in court. If you win that action, and the tenant remains in possession, then you must file for a writ of possession. Only upon the execution of the writ of possession may you forcefully re-take possession of the property.
As a tenant, you also have three types of notices available to you: an "assertion" notice, a 21/30 notice, or a 30 day notice. In an "assertion" notice you simply notify, in writing, the landlord of the problem and allow the landlord a "reasonable" amount of time to fix it. A 21/30 notice is for remediable breaches of the lease which, again, allows the landlord 21 days to fix the breach or else the lease terminates 30 days after the notice - you must still pay your rent while this notice is pending. A 30 day notice is for a non-remediable breach, and again, the lease will terminate automatically after 30 days - but you must still pay your rent while this notice is pending. For the latter two notices, if the lease does, in fact, terminate after those 30 days, then, and only then, you may stop paying rent, but you also must vacate the property by the end of those 30 days. For the "assertion" notice, once a "reasonable" time has passed, you can go to the General District Court and file a Tenant's Assertion laying out the problems. You will then continue to pay rent, only you pay it to the court to go into the court's escrow account. The judge ruling on the case will decide whether to remit some or all of that money to you, and will also decide what corrective actions the landlord must take (or if the lease needs to just terminate).
[Please note that I have expanded on the options available to a tenant to avoid self-help in three posts dated November 13, 2013, November 20, 2013, and December 4, 2014.]
These procedures can be complicated, and they usually take a couple of months to complete, but they are required legal procedures. Not following these procedures could very well end up leaving you in a world of trouble.
Commercial Leases - The Exception
I said in the introduction there is a major exception. That would be commercial leases. Commercial leases are leases to persons or companies who do not plan to live on the premises, but instead plan to run a business out of the premises. A landlord (but not a tenant) may engage in "self-help" in some cases in a commercial lease. However, that right must be clearly delineated in the lease, and, unless there are specific rules in the lease for how personal property is to be handled, the landlord must be very careful to protect the personal property of the tenant if engaging in self-help. In my opinion, it's always safer to go the legal, non-self-help route, even in commercial lease situations, because unless you have an airtight lease, there's always an opportunity for trouble with self-help.
Conclusion
If you are in a situation with a bad landlord or tenant, self-help is not the answer. There is a specific legal process you generally must, and pretty much always should, follow. If you would like assistance in ensuring that you are following all legal steps properly in your landlord/tenant dispute, please feel free to call (703)281-0134, or e-mail me at sleven@thebaldwinlawfirm.com to set up your initial consultation. It's free for up to half an hour!
Where I felt it needed, I have added a few lines here and there. Additions that were not in the original blog post will be in brackets ([]).
As always, before reading this post, please review my disclaimer by following the link above or by clicking on this link. As always, legal principles discussed in this post are applicable only to the Commonwealth of Virginia.
Introduction
I cannot count the number of times I am called upon for a consultation or hear about a case in which the landlord or the tenant has committed some very egregious violations of the lease. I'm nodding along, interested in all the terrible things the other party has done, and then I get to the part I am afraid of. If it's a landlord, I hear "so I kicked them out and changed the locks." If it's a tenant, I hear "so I'm withholding rent until they fix it." That's when a potentially good case goes bad.
What I've referred to above is what we in the landlord/tenant world call "self-help." Self-help is when, instead of going through the courts, the aggrieved party simply takes matters into his or her own hands. It's faster, cheaper and easier than going through the courts, so it's no wonder that it's so appealing. And it works great - if the other party has no idea what their rights are, what the law is, and what remedies they may have available to them. If they do, though, then you've gone from being on the right side of the law to being on the wrong side, and it can cost you, big time.
This blog post will attempt to cover a little bit about the bad things that can happen to you if you try to "self-help," the one major exception to that rule, and a brief discussion of the correct process.
VRLTA vs. Common Law/Chapter 13 Leases
Regular readers of my blog will remember my post from some time ago covering the difference between leases under the Virginia Residential Landlord and Tenant Act (VRLTA) or leases under the Common Law or Chapter 13 of Title 55 of the Code of Virginia. As you may recall, while rights and remedies under VRLTA cannot be waived, most common law/chapter 13 rights can be waived in the lease. Astute readers, however, will notice that I mentioned that most rights under the common law/chapter 13 can be waived - the implication being that there are some that cannot. The right to have the court as a bulwark against abuse, and subsequently the prohibition on self-help, is generally not waivable in even a common law/chapter 13 lease. As a result, the rules in this post are equally applicable to VRLTA leases and common law/chapter 13 leases.
The Danger of Landlord Self-Help
If your tenant stops paying the rent, violates your lease, or otherwise causes trouble, and your response is to take possession of the property yourself, you could be in for a world of trouble. Your tenant can file suit and get a court to actually order you to give possession back. You will likely be charged money for the loss of use and "quiet enjoyment" of the property while the tenant was deprived of it. You will also likely be assessed the tenant's attorneys' fees. Finally, heaven help you if you did anything to the tenant's personal property.
In short, self-help as a landlord will likely end up costing you far more than whatever cost you would incur by waiting and following proper procedures. [It is important to note that, after being sued by the tenant, you could still turn around and have the tenant properly evicted from the property - you will still owe the tenant for your improper eviction, however, and you may very well have waived your right to retain any part of the security deposit.]
The Danger of Tenant Self-Help
The most common form of tenant self-help when the landlord violates the lease is to simply stop paying rent. Guess what - if you do that, you can still be evicted for non-payment of rent. You might ultimately not have to pay the rent that you withheld, but by going outside the proper channels you will likely be evicted, be assessed your landlord's attorneys' fees, and you may very well still have to pay that rent. Again, self-help will likely end up costing you far more than the cost of waiting and following proper procedures.
The Proper Procedures
As a landlord or tenant, there are proper legal procedures to take. As a landlord, there are three types of notices you must give first: 5 day pay or quit, 21/30 notice, or 30 day notice. The 5 day pay or quit is for non-payment of rent only. This gives the tenant 5 days to get paid in full or the lease terminates. The 21/30 notice is for a remediable breach of the lease which gives the tenant 21 days to fix the breach, or else the lease terminates 30 days following the notice. The 30 day notice is for a non-remediable breach which simply notifies the tenant that the lease will terminate after 30 days. If, under any of these notices, the lease does terminate and the tenant remains on the premises, you must file an Unlawful Detainer action in court. If you win that action, and the tenant remains in possession, then you must file for a writ of possession. Only upon the execution of the writ of possession may you forcefully re-take possession of the property.
As a tenant, you also have three types of notices available to you: an "assertion" notice, a 21/30 notice, or a 30 day notice. In an "assertion" notice you simply notify, in writing, the landlord of the problem and allow the landlord a "reasonable" amount of time to fix it. A 21/30 notice is for remediable breaches of the lease which, again, allows the landlord 21 days to fix the breach or else the lease terminates 30 days after the notice - you must still pay your rent while this notice is pending. A 30 day notice is for a non-remediable breach, and again, the lease will terminate automatically after 30 days - but you must still pay your rent while this notice is pending. For the latter two notices, if the lease does, in fact, terminate after those 30 days, then, and only then, you may stop paying rent, but you also must vacate the property by the end of those 30 days. For the "assertion" notice, once a "reasonable" time has passed, you can go to the General District Court and file a Tenant's Assertion laying out the problems. You will then continue to pay rent, only you pay it to the court to go into the court's escrow account. The judge ruling on the case will decide whether to remit some or all of that money to you, and will also decide what corrective actions the landlord must take (or if the lease needs to just terminate).
[Please note that I have expanded on the options available to a tenant to avoid self-help in three posts dated November 13, 2013, November 20, 2013, and December 4, 2014.]
These procedures can be complicated, and they usually take a couple of months to complete, but they are required legal procedures. Not following these procedures could very well end up leaving you in a world of trouble.
Commercial Leases - The Exception
I said in the introduction there is a major exception. That would be commercial leases. Commercial leases are leases to persons or companies who do not plan to live on the premises, but instead plan to run a business out of the premises. A landlord (but not a tenant) may engage in "self-help" in some cases in a commercial lease. However, that right must be clearly delineated in the lease, and, unless there are specific rules in the lease for how personal property is to be handled, the landlord must be very careful to protect the personal property of the tenant if engaging in self-help. In my opinion, it's always safer to go the legal, non-self-help route, even in commercial lease situations, because unless you have an airtight lease, there's always an opportunity for trouble with self-help.
Conclusion
If you are in a situation with a bad landlord or tenant, self-help is not the answer. There is a specific legal process you generally must, and pretty much always should, follow. If you would like assistance in ensuring that you are following all legal steps properly in your landlord/tenant dispute, please feel free to call (703)281-0134, or e-mail me at sleven@thebaldwinlawfirm.com to set up your initial consultation. It's free for up to half an hour!
Wednesday, August 6, 2014
Virginia Visitation Does Not Depend on Child Support
As always, prior to reading this post, please review my disclaimer by following the link above or by clicking on this link. As always, any legal principles discussed apply only to the Commonwealth of Virginia.
Introduction
"You can't see your son until you pay your child support!" I cannot count the number of times I have seen that line or something similar to it show up in e-mails given to me at a consultation. Of course, I've also seen the opposite - "You didn't let me see my son, so I'm not going to pay my child support!" For whatever reason, many people have the idea that child support and visitation are related - that if the non-custodial parent doesn't pay, he doesn't get visitation, and if the custodial parent refuses visitation, the non-custodial parent doesn't need to pay child support. This could not be further from the truth, and if you try to act on this belief, you could get in serious trouble. You could even face jail time.
In today's post, I will discuss how and why child support and visitation are unrelated (with a big caveat), and the proper way to handle unpaid child support and denied visitation.
Decoupling Support and Visitation
It's easy to understand why so many parents think support and visitation are related. For one thing, when these things are initially set, they are related. Specifically, a parent who is refusing to pay support is less likely to get a whole lot of visitation, and a parent with a lot of visitation will frequently have a lower support order (see my post on calculating child support to explain, for example, how shared custody support is calculated). Nonetheless, once the original support and visitation orders are entered, the relationship ends.
The reason for this is because both visitation and support are really the right of the child, not the parent. Child support is the embodiment of the child's right to be supported by both parents. Visitation is the embodiment of the child's right to have a relationship with both parents. A person should not lose his rights just because of what someone else did. Thus, the child should not lose his right to support just because the custodial parent denied visitation, nor should the child lose his right to visitation just because the non-custodial parent refused to pay support. The violating parent has infringed on the child's rights, not the other parent's rights, and as a result, it is not the other parent's right to retaliate.
What to Do When the Non-Custodial Parent Doesn't Pay Support
So, what do you do if the non-custodial parent isn't paying support? Well, if you don't have a court order for support already, you need to get one. Otherwise there really isn't anything you can do. If you do have a court order, you need to file to have the other parent held in contempt of court. The other parent can then be ordered to pay you his arrearage, interest, and penalties. Further, the other parent could be sent to jail, or have a suspended jail sentence to hold over their head to force them to pay. They can also have their driver's license suspended, and their passport revoked. What you cannot do, however, is withhold visitation.
What to Do When the Custodial Parent Withholds Visitation
So, what do you do if the custodial parent is withholding visitation? Well, like above, if you don't have a court-ordered custody/visitation arrangement, it's time to get one. The other parent's refusal to give you visitation can be used against them when trying to get a favorable schedule. If you do have an order, again, you need to file to have the other parent held in contempt of court. The other parent can be fined, forced to pay your attorneys' fees, or also sent to jail. The other parent can also be ordered to give you "make-up" visitation time. Finally, you can also use the other parent's refusal as a "material change in circumstances," and try to get custody yourself. What you cannot do, again, is withhold child support.
What Happens If You Do it Anyways
So, say you've read this post and decide to ignore what I say here and retaliate for unpaid support with withheld visitation or retaliate for withheld visitation with unpaid support anyways - what can happen? Well, the other parent can do exactly what I have listed above. If you don't pay support or you withhold visitation, the other parent can have you held in contempt of court regardless of his or her own contempt. This can be especially devastating for a custodial parent, since the ultimate result could be the loss of custody altogether. Is that really a risk you are willing to take out of spite?
Conclusion
If the other parent of your child is failing to pay child support or withholding visitation, don't retaliate by withholding visitation or refusing to pay child support yourself. Hire an attorney and have them held in contempt of court. If you are involved in such a situation, feel free to call (703)281-0134 or e-mail me at SLeven@thebaldwinlawfirm.com to set up a consultation. Our initial consultations are free for up to half an hour!
Introduction
"You can't see your son until you pay your child support!" I cannot count the number of times I have seen that line or something similar to it show up in e-mails given to me at a consultation. Of course, I've also seen the opposite - "You didn't let me see my son, so I'm not going to pay my child support!" For whatever reason, many people have the idea that child support and visitation are related - that if the non-custodial parent doesn't pay, he doesn't get visitation, and if the custodial parent refuses visitation, the non-custodial parent doesn't need to pay child support. This could not be further from the truth, and if you try to act on this belief, you could get in serious trouble. You could even face jail time.
In today's post, I will discuss how and why child support and visitation are unrelated (with a big caveat), and the proper way to handle unpaid child support and denied visitation.
Decoupling Support and Visitation
It's easy to understand why so many parents think support and visitation are related. For one thing, when these things are initially set, they are related. Specifically, a parent who is refusing to pay support is less likely to get a whole lot of visitation, and a parent with a lot of visitation will frequently have a lower support order (see my post on calculating child support to explain, for example, how shared custody support is calculated). Nonetheless, once the original support and visitation orders are entered, the relationship ends.
The reason for this is because both visitation and support are really the right of the child, not the parent. Child support is the embodiment of the child's right to be supported by both parents. Visitation is the embodiment of the child's right to have a relationship with both parents. A person should not lose his rights just because of what someone else did. Thus, the child should not lose his right to support just because the custodial parent denied visitation, nor should the child lose his right to visitation just because the non-custodial parent refused to pay support. The violating parent has infringed on the child's rights, not the other parent's rights, and as a result, it is not the other parent's right to retaliate.
What to Do When the Non-Custodial Parent Doesn't Pay Support
So, what do you do if the non-custodial parent isn't paying support? Well, if you don't have a court order for support already, you need to get one. Otherwise there really isn't anything you can do. If you do have a court order, you need to file to have the other parent held in contempt of court. The other parent can then be ordered to pay you his arrearage, interest, and penalties. Further, the other parent could be sent to jail, or have a suspended jail sentence to hold over their head to force them to pay. They can also have their driver's license suspended, and their passport revoked. What you cannot do, however, is withhold visitation.
What to Do When the Custodial Parent Withholds Visitation
So, what do you do if the custodial parent is withholding visitation? Well, like above, if you don't have a court-ordered custody/visitation arrangement, it's time to get one. The other parent's refusal to give you visitation can be used against them when trying to get a favorable schedule. If you do have an order, again, you need to file to have the other parent held in contempt of court. The other parent can be fined, forced to pay your attorneys' fees, or also sent to jail. The other parent can also be ordered to give you "make-up" visitation time. Finally, you can also use the other parent's refusal as a "material change in circumstances," and try to get custody yourself. What you cannot do, again, is withhold child support.
What Happens If You Do it Anyways
So, say you've read this post and decide to ignore what I say here and retaliate for unpaid support with withheld visitation or retaliate for withheld visitation with unpaid support anyways - what can happen? Well, the other parent can do exactly what I have listed above. If you don't pay support or you withhold visitation, the other parent can have you held in contempt of court regardless of his or her own contempt. This can be especially devastating for a custodial parent, since the ultimate result could be the loss of custody altogether. Is that really a risk you are willing to take out of spite?
Conclusion
If the other parent of your child is failing to pay child support or withholding visitation, don't retaliate by withholding visitation or refusing to pay child support yourself. Hire an attorney and have them held in contempt of court. If you are involved in such a situation, feel free to call (703)281-0134 or e-mail me at SLeven@thebaldwinlawfirm.com to set up a consultation. Our initial consultations are free for up to half an hour!
Friday, August 1, 2014
Settling Lawsuits in Virginia
As always, before reading this post, please review my disclaimer by clicking on the link above or by clicking on this link. As always, any legal principles discussed apply only to the Commonwealth of Virginia.
Introduction
As you probably know, most legal disputes end in settlement. Sure, plenty go to trial, but in most cases the parties reach some kind of agreement that everyone is unhappy with, but figure is better than taking the gamble of actually going to court. There are many reasons to accept or not accept a settlement, and I may go into those in another post, but today I plan to tackle another subject. Once you've settled, how do you actually implement that settlement?
The reality is, there are numerous ways to implement a settlement, but there are three I want to cover today because, in my experience, the vast majority of settlements I am involved in take one of these three approaches. They are, specifically, a signed settlement agreement, a settlement by action, and a confession of judgment note.
Signed Settlement Agreements
A signed settlement agreement is exactly what it sounds like - a written agreement signed by all parties (or, in some cases, their attorneys). The agreement will usually include a waiver of the right to bring a suit (or dismissal of a currently active suit), and terms. It will usually supersede any agreement that was the basis of the original dispute, and will usually prevent the original dispute from ever being disputed in court.
So, as you can imagine, the idea behind a settlement agreement is that it is an enforceable contract between the parties. A breach of the agreement, then, becomes its own basis for a lawsuit - and frequently these agreements will include attorneys' fee provisions to discourage breaches. An even stronger advantage is that in some cases (particularly divorces), the agreement can be incorporated into a court order, so you can use the court's contempt power to enforce it.
The vast majority of settlement agreements I see are implemented this way. The agreements are usually fairly clear and easy to follow, and rarely breached. The biggest disadvantage, however, is that typically a breach will leave you somewhere near square one - you still have to file a lawsuit (usually) to deal with the breach.
Settlement by Action
A settlement by action is a name I have completely made up for a fairly common occurrence. Basically, what happens is that when a lawsuit is pending, a settlement is reached where, instead of having a signed agreement, the party filing the suit simply dismisses the case with prejudice (meaning it can never be re-raised). The two circumstances where I typically see this are where the other party has paid some amount such that the amount in dispute remaining isn't worth pursuing, or where there is a counter-claim, and both parties agree to just dismiss their claims with prejudice.
This is a very informal approach to settlement so it might surprise you to know that I actually see it a lot. It tends to save many people time, and with it legal fees, which is its appeal. The down side, of course, is that there is almost no way to enforce such an agreement if someone backs out before the suit is dismissed.
Confession of Judgment Note
A confession of judgment note has, in all honesty, become my favorite means of settling a case, although it is really only good for lawsuits that are just plain lawsuits for money. A confession of judgment note is a promissory note, signed by only one party, agreeing to pay a certain amount on a certain schedule. If the payor defaults on the note, the payee can take the note to the courthouse and get a judgment automatically entered against the payor - no need for a lawsuit, trial, etc. Obviously the payor has ways to challenge the note, but as long as the underlying fact (that the payor missed a payment) is true, those challenges usually fail.
This may sound very one-sided - how does the payor enforce the note against the payees, for example - but the beauty of a note is that as long as you have the provisions required by law in there, you can add pretty much anything. When I draft a confession of judgment note settling a case I include all the payer's obligations, yes, but I also include what I call a "consideration" section. This section outlines what all the payees have to do in order for the note to be enforceable. If the payees do not do something they are supposed to, the note itself becomes invalid, and the payor no longer needs to make payments.
I have found that confession of judgment notes are usually very good at making both parties compliant. If the payees fail to comply, they lose a source of guaranteed payment, and usually have no way to re-raise their initial lawsuit (usually the consideration section requires them to have dismissed their ongoing lawsuit with prejudice, or signed a waiver of their right to bring a suit, and that provision is almost never violated, since it would mean they had negotiated in bad faith, so the other provisions of the consideration section likely won't apply until the payees have already lost their right to bring a new claim). This means the payees will end up getting far less than if they had followed their obligations since the payor can stop paying and they would have nothing they could do about it.
If the payor fails to comply, on the other hand, a judgment is automatically entered without a trial, and garnishment can begin after 21 days. Further, usually a confession of judgment note settlement will actually have the payor owe the payee the full amount the payee was seeking, but then have the remaining amount waived once the payor has paid a certain amount without a default. As a result, the payor will end up owing far more in case of a breach than the payor would have paid if the payor had not breached.
Conclusion
If you are in a dispute that you want to settle, it is often hard to tell what the best settlement method may be. An attorney can help you figure that out, and help you make sure that all documents are crafted properly under the law (especially confessions of judgment, which have many legal traps). If you would like to discuss your options, please feel free to call (703)281-0134 or e-mail me at sleven@thebaldwinlawfirm.com to set up a consultation. Our initial consultations are free for up to half an hour!
Introduction
As you probably know, most legal disputes end in settlement. Sure, plenty go to trial, but in most cases the parties reach some kind of agreement that everyone is unhappy with, but figure is better than taking the gamble of actually going to court. There are many reasons to accept or not accept a settlement, and I may go into those in another post, but today I plan to tackle another subject. Once you've settled, how do you actually implement that settlement?
The reality is, there are numerous ways to implement a settlement, but there are three I want to cover today because, in my experience, the vast majority of settlements I am involved in take one of these three approaches. They are, specifically, a signed settlement agreement, a settlement by action, and a confession of judgment note.
Signed Settlement Agreements
A signed settlement agreement is exactly what it sounds like - a written agreement signed by all parties (or, in some cases, their attorneys). The agreement will usually include a waiver of the right to bring a suit (or dismissal of a currently active suit), and terms. It will usually supersede any agreement that was the basis of the original dispute, and will usually prevent the original dispute from ever being disputed in court.
So, as you can imagine, the idea behind a settlement agreement is that it is an enforceable contract between the parties. A breach of the agreement, then, becomes its own basis for a lawsuit - and frequently these agreements will include attorneys' fee provisions to discourage breaches. An even stronger advantage is that in some cases (particularly divorces), the agreement can be incorporated into a court order, so you can use the court's contempt power to enforce it.
The vast majority of settlement agreements I see are implemented this way. The agreements are usually fairly clear and easy to follow, and rarely breached. The biggest disadvantage, however, is that typically a breach will leave you somewhere near square one - you still have to file a lawsuit (usually) to deal with the breach.
Settlement by Action
A settlement by action is a name I have completely made up for a fairly common occurrence. Basically, what happens is that when a lawsuit is pending, a settlement is reached where, instead of having a signed agreement, the party filing the suit simply dismisses the case with prejudice (meaning it can never be re-raised). The two circumstances where I typically see this are where the other party has paid some amount such that the amount in dispute remaining isn't worth pursuing, or where there is a counter-claim, and both parties agree to just dismiss their claims with prejudice.
This is a very informal approach to settlement so it might surprise you to know that I actually see it a lot. It tends to save many people time, and with it legal fees, which is its appeal. The down side, of course, is that there is almost no way to enforce such an agreement if someone backs out before the suit is dismissed.
Confession of Judgment Note
A confession of judgment note has, in all honesty, become my favorite means of settling a case, although it is really only good for lawsuits that are just plain lawsuits for money. A confession of judgment note is a promissory note, signed by only one party, agreeing to pay a certain amount on a certain schedule. If the payor defaults on the note, the payee can take the note to the courthouse and get a judgment automatically entered against the payor - no need for a lawsuit, trial, etc. Obviously the payor has ways to challenge the note, but as long as the underlying fact (that the payor missed a payment) is true, those challenges usually fail.
This may sound very one-sided - how does the payor enforce the note against the payees, for example - but the beauty of a note is that as long as you have the provisions required by law in there, you can add pretty much anything. When I draft a confession of judgment note settling a case I include all the payer's obligations, yes, but I also include what I call a "consideration" section. This section outlines what all the payees have to do in order for the note to be enforceable. If the payees do not do something they are supposed to, the note itself becomes invalid, and the payor no longer needs to make payments.
I have found that confession of judgment notes are usually very good at making both parties compliant. If the payees fail to comply, they lose a source of guaranteed payment, and usually have no way to re-raise their initial lawsuit (usually the consideration section requires them to have dismissed their ongoing lawsuit with prejudice, or signed a waiver of their right to bring a suit, and that provision is almost never violated, since it would mean they had negotiated in bad faith, so the other provisions of the consideration section likely won't apply until the payees have already lost their right to bring a new claim). This means the payees will end up getting far less than if they had followed their obligations since the payor can stop paying and they would have nothing they could do about it.
If the payor fails to comply, on the other hand, a judgment is automatically entered without a trial, and garnishment can begin after 21 days. Further, usually a confession of judgment note settlement will actually have the payor owe the payee the full amount the payee was seeking, but then have the remaining amount waived once the payor has paid a certain amount without a default. As a result, the payor will end up owing far more in case of a breach than the payor would have paid if the payor had not breached.
Conclusion
If you are in a dispute that you want to settle, it is often hard to tell what the best settlement method may be. An attorney can help you figure that out, and help you make sure that all documents are crafted properly under the law (especially confessions of judgment, which have many legal traps). If you would like to discuss your options, please feel free to call (703)281-0134 or e-mail me at sleven@thebaldwinlawfirm.com to set up a consultation. Our initial consultations are free for up to half an hour!
Tuesday, July 29, 2014
Stop Saying Half of Marriages End in Divorce!
So, it's Tuesday, and that usually means a "Classic" blog post (on weeks when I get the chance to do one). However, today I got struck by one of my pet peeves that I had to get off my chest, and since it relates directly to one of the areas of law in which I practice (family law), I thought a blog post might be a good way to do that. If you're wondering what that pet peeve is, the title says it all - that people keep repeating the same old line that half of marriages end in divorce. It needs to stop, and if this blog post gets even one person to stop repeating this line, I will consider it a success.
There are three big reasons why I think this saying needs to go away:
1 - It is actually likely that the 50% number has never been true.
2 - Divorce rates have steadily decreased over the past twenty years, yet the magical "50%" number somehow stays the same - math says this isn't possible.
3 - This number, by artificially inflating our view of the frequency of divorce, downplays the often very serious reasons why many marriages fall apart, leading to grossly unfair assumptions about people who have been through divorce.
So, let me tackle each of the three reasons for a moment. First up is my point that the 50% number has likely never been true.
So, divorce rates are very hard to calculate because marriage by definition can last a long time and end in divorce, last a short time and end in death, and many other variables come into play. As a result, guessing the divorce rate is a very imprecise science. You can also look at it two ways - do you want to say what percentage of marriages entered on a certain date ended in divorce? If so, there are marriages still going on from that date that might end in divorce, so your number will undershoot. Moreover, marriages from the past are unlikely to tell you about the likelihood of success of marriages today. Do you want to count how many adults have been married and divorced? If so, a good percentage of them are re-married in successful marriages, so you will undercount the number of marriages involved and get an artificially high divorce rate.
The end result of all of this is that the divorce rate is hard to calculate to begin with. So, with that already in mind, where did this 50% number come from? The fact is, no one really knows, but there's a good guess. A series of articles came out in 1979, 1980 and 1981 (yes, that long ago) claiming that there was a 50% divorce rate due to a ridiculous misreading of facts. For example, in 1981, there were 2.4 million marriages but 1.2 million divorces - thus, the articles concluded that half of marriages ended in divorce. However, almost none of those divorces were from marriages that started that year, and there were 54 million marriages already in existence prior to 1981.
So, in other words, the 50% number was flawed from the start, there has never been a 50% divorce rate in this country.
Now, on to my second point, that the divorce rate has been dropping. Since interest has grown in doing real calculations, as opposed to the hysteria mentioned above, it has been widely accepted that the best measure is the second one I mentioned above - find what percentage of adults who have ever been married have also been divorced. Yes, this will miss re-marriages that are successful, but it will also miss re-marriages that are unsuccessful, so the belief is that the number, while imperfect, is amongst the better indicators that we have. So, with that in mind, what is the divorce rate (or our best guess of it) and how has it changed?
Well, 2009 census numbers tell us that somewhere around 35% of adults who have ever been married have ever been divorced - down from a high of 40% in 1996. So, our current best estimate of divorce rate is actually around 35%.
We can also look at an alternative measure, however, in that the census does release numbers also showing what percentage of marriages make it to certain anniversaries. Remember, however, that this number will dramatically overstate the divorce rate because marriages ending in death of one spouse also will not have made it to that anniversary. So, about 55% of marriages entered into between 1960 and 1964 made it to their 40th anniversary (this study was done in 2009 of data that was a bit older, thus why we are talking 40th anniversary, not 50th), about 53% of marriages entered into between 1965 and 1969 made it to their 35th anniversary, about 53% of marriages entered into between 1970 and 1974 made it to their 30th anniversary, about 54% of marriages entered into between 1975 and 1979 made it to their 25th anniversary, about 58% of marriages entered into between 1980 and 1984 made it to their 20th anniversary, about 66% of marriages entered into between 1985 and 1989 made it to their 15th anniversary, about 76% of marriages entered into between 1990 and 1994 made it to their 10th anniversary, and about 89% of marriages entered into between 1995 and 1999 made it to their 5th anniversary.
So, we can see a couple of things from those numbers. First, the age groups show us an increase in divorce rates in the 70's, followed by a decrease. Second, some of the later groups are not too reliable, since they still have plenty of time to get divorced (in my experience, most divorces happen after the 5th anniversary but before the 15th anniversary - and census numbers back me up on that, showing the average age of a marriage at divorce to be 8 years - but of course I do see plenty outside that range). Third, however, every single group still had a majority of marriages together at the time of the study. That means not a one could have had a divorce rate of 50%, especially when you consider that a good percentage of these marriages (especially the older ones) likely ended in death, not divorce.
In short, it is clear now that if there ever was a 50% divorce rate (there almost definitely never was, but if), that's certainly not true now. So, you have no reason to look at a couple and conclude they have a 50% chance of not making it - you'd be much better served looking at them and thinking there's about a two-thirds chance they will make it.
Now, my final point was that this false statistic is actually harmful. Because of the field of law I practice, I often see the stigma people face associated with divorce - even though the vast majority of cases I handle are ones where a divorce is clearly necessary.
Nonetheless, we all know stories of people who rushed to a divorce over something small and stupid. Combine that with the notion that half of marriages end in divorce and our own inherent knowledge that it can't really be that half of all marriages have severe enough problems to warrant divorce, then we reach a culture that concludes that most divorces are just people being too lazy to fix their problems. This further creates a culture that stigmatizes those who have been divorced, without good reason to do so.
I firmly believe that if we put the 50% number to bed, we can grapple with the fact that, in my opinion, most divorces are warranted. Most come after the couple tried very hard to solve their problems first. Many, in fact, come much later than they should have, precisely because the couple tried so hard to make it work.
I am happily married, and because I know the facts and the numbers, I expect to stay married to the same woman for the rest of our lives. Nonetheless, I refuse to belittle and demean those whose marriages do not work out, who need to get on with their lives, and who make the often gut-wrenching, personally devastating choice to get a divorce. If we can finally get this 50% number out of our vernacular, I would hope that would mean many more people would be ready to join me in refusing to think less of those whose marriages just didn't work.
There are three big reasons why I think this saying needs to go away:
1 - It is actually likely that the 50% number has never been true.
2 - Divorce rates have steadily decreased over the past twenty years, yet the magical "50%" number somehow stays the same - math says this isn't possible.
3 - This number, by artificially inflating our view of the frequency of divorce, downplays the often very serious reasons why many marriages fall apart, leading to grossly unfair assumptions about people who have been through divorce.
So, let me tackle each of the three reasons for a moment. First up is my point that the 50% number has likely never been true.
So, divorce rates are very hard to calculate because marriage by definition can last a long time and end in divorce, last a short time and end in death, and many other variables come into play. As a result, guessing the divorce rate is a very imprecise science. You can also look at it two ways - do you want to say what percentage of marriages entered on a certain date ended in divorce? If so, there are marriages still going on from that date that might end in divorce, so your number will undershoot. Moreover, marriages from the past are unlikely to tell you about the likelihood of success of marriages today. Do you want to count how many adults have been married and divorced? If so, a good percentage of them are re-married in successful marriages, so you will undercount the number of marriages involved and get an artificially high divorce rate.
The end result of all of this is that the divorce rate is hard to calculate to begin with. So, with that already in mind, where did this 50% number come from? The fact is, no one really knows, but there's a good guess. A series of articles came out in 1979, 1980 and 1981 (yes, that long ago) claiming that there was a 50% divorce rate due to a ridiculous misreading of facts. For example, in 1981, there were 2.4 million marriages but 1.2 million divorces - thus, the articles concluded that half of marriages ended in divorce. However, almost none of those divorces were from marriages that started that year, and there were 54 million marriages already in existence prior to 1981.
So, in other words, the 50% number was flawed from the start, there has never been a 50% divorce rate in this country.
Now, on to my second point, that the divorce rate has been dropping. Since interest has grown in doing real calculations, as opposed to the hysteria mentioned above, it has been widely accepted that the best measure is the second one I mentioned above - find what percentage of adults who have ever been married have also been divorced. Yes, this will miss re-marriages that are successful, but it will also miss re-marriages that are unsuccessful, so the belief is that the number, while imperfect, is amongst the better indicators that we have. So, with that in mind, what is the divorce rate (or our best guess of it) and how has it changed?
Well, 2009 census numbers tell us that somewhere around 35% of adults who have ever been married have ever been divorced - down from a high of 40% in 1996. So, our current best estimate of divorce rate is actually around 35%.
We can also look at an alternative measure, however, in that the census does release numbers also showing what percentage of marriages make it to certain anniversaries. Remember, however, that this number will dramatically overstate the divorce rate because marriages ending in death of one spouse also will not have made it to that anniversary. So, about 55% of marriages entered into between 1960 and 1964 made it to their 40th anniversary (this study was done in 2009 of data that was a bit older, thus why we are talking 40th anniversary, not 50th), about 53% of marriages entered into between 1965 and 1969 made it to their 35th anniversary, about 53% of marriages entered into between 1970 and 1974 made it to their 30th anniversary, about 54% of marriages entered into between 1975 and 1979 made it to their 25th anniversary, about 58% of marriages entered into between 1980 and 1984 made it to their 20th anniversary, about 66% of marriages entered into between 1985 and 1989 made it to their 15th anniversary, about 76% of marriages entered into between 1990 and 1994 made it to their 10th anniversary, and about 89% of marriages entered into between 1995 and 1999 made it to their 5th anniversary.
So, we can see a couple of things from those numbers. First, the age groups show us an increase in divorce rates in the 70's, followed by a decrease. Second, some of the later groups are not too reliable, since they still have plenty of time to get divorced (in my experience, most divorces happen after the 5th anniversary but before the 15th anniversary - and census numbers back me up on that, showing the average age of a marriage at divorce to be 8 years - but of course I do see plenty outside that range). Third, however, every single group still had a majority of marriages together at the time of the study. That means not a one could have had a divorce rate of 50%, especially when you consider that a good percentage of these marriages (especially the older ones) likely ended in death, not divorce.
In short, it is clear now that if there ever was a 50% divorce rate (there almost definitely never was, but if), that's certainly not true now. So, you have no reason to look at a couple and conclude they have a 50% chance of not making it - you'd be much better served looking at them and thinking there's about a two-thirds chance they will make it.
Now, my final point was that this false statistic is actually harmful. Because of the field of law I practice, I often see the stigma people face associated with divorce - even though the vast majority of cases I handle are ones where a divorce is clearly necessary.
Nonetheless, we all know stories of people who rushed to a divorce over something small and stupid. Combine that with the notion that half of marriages end in divorce and our own inherent knowledge that it can't really be that half of all marriages have severe enough problems to warrant divorce, then we reach a culture that concludes that most divorces are just people being too lazy to fix their problems. This further creates a culture that stigmatizes those who have been divorced, without good reason to do so.
I firmly believe that if we put the 50% number to bed, we can grapple with the fact that, in my opinion, most divorces are warranted. Most come after the couple tried very hard to solve their problems first. Many, in fact, come much later than they should have, precisely because the couple tried so hard to make it work.
I am happily married, and because I know the facts and the numbers, I expect to stay married to the same woman for the rest of our lives. Nonetheless, I refuse to belittle and demean those whose marriages do not work out, who need to get on with their lives, and who make the often gut-wrenching, personally devastating choice to get a divorce. If we can finally get this 50% number out of our vernacular, I would hope that would mean many more people would be ready to join me in refusing to think less of those whose marriages just didn't work.
Thursday, July 24, 2014
No Post This Week
Hi all. Sorry that I will not be able to make a post this week. An unanticipated crisis at the office is not giving me the time I need to put together a post. I started writing one and immediately realized it would not be up to a quality I would be comfortable with due to my time constraints, so stay tuned next week!
Thursday, July 17, 2014
Re-negotiating Contracts in Virginia: When Things Don't Go as Planned
As always, before reading this blog post, please review my disclaimer by following the link above or by clicking on this link. As always, any legal principles discussed apply only to the Commonwealth of Virginia.
Introduction
When we sign contracts, usually we intend to obey them, but the fundamental problem with contracts is that we do not always know what the future holds. Sometimes events beyond our control stop us from meeting our contractual obligations, sometimes a contract proves a good idea in theory but not in practice, and sometimes a contract just becomes outdated. Whatever the reason, sometimes it becomes unreasonable or impossible for you to obey a contract you signed. Rather than just breaching the contract and waiting to be sued, however, you have another avenue available - attempt to renegotiate the contract.
In today's blog post, I'll cover some of the basic pitfalls and advantages surrounding renegotiation of contracts.
The Defaults Have Changed
Perhaps it is obvious, but the reality is renegotiating a contract is not the same as negotiating an initial contract. Perhaps the biggest difference is that the default arrangement (what occurs without an agreement) is different. Initially, if talks break down, there's no relationship developed, and each party can go on their way. In a renegotiation, if talks break down, then the original contract is still in force. This tends to cause the party wanting the renegotiation to be at a bit of a disadvantage - you have to convince the other party that a new contract is better for them than the old contract, not just better for you.
In many cases, however, this is not as hard as it may seem. Litigation is expensive, and collecting judgments takes a great deal of time and effort (see my blog post on collecting judgments for more on that). Worse yet, if one of the issues is that you are becoming insolvent, the other party knows you could always declare bankruptcy, and they'd be stuck with nothing. So you can overcome this disadvantage, but it's important you know at the outset that you are at an inherent disadvantage.
The Rules for Determining if a Contract Exists May Have Changed
You probably know that there are two types of contracts: written and oral. There is actually a third type as well, an implied in fact contract (where there was never an express agreement between the parties in writing or orally, but the conduct of both parties indicates that they both understood a contract to exist [or, maybe one party made an offer, and the other, instead of accepting the offer, acted in a manner to indicate he had accepted the offer]). Normally, all three types of contracts are fully valid and enforceable by a court so long as you can prove that the contract exists (and your suit was filed within the relevant statute of limitations).
Many written contracts, however, especially more complicated ones, have modification clauses. These modification clauses lay out the rules for how that contract can be modified. A typical modification clause will say that the modification "must be in writing signed by the party against whom enforcement is sought." This means an express oral agreement, or an implied in fact agreement, which changes the original contract is automatically invalid. Instead, the party against whom you are trying to prove the original contract was changed must have signed a written modification.
Some modification clauses go even further and require that it "must be in writing signed by all parties." In those cases, even a writing signed by the other party is insufficient. Some go even further and say "must be in writing signed by all parties under the same formality as this agreement." So, if you have that and the original contract required all parties to sign in front of a notary, the modification is not valid unless all parties sign it, too, in front of a notary.
Your modification clause (if there is one) is very important to know when you renegotiate a contract. You need to make sure it is followed, otherwise all your hard work to renegotiate may be for nothing.
Offering Concessions
The reality is, if you want to renegotiate a contract, you need to be prepared to make some serious concessions, especially if the other party does not really want a renegotiated contract. So, if your problem is that you cannot pay, for example, then you probably need to give up some of what you are paying for. A common renegotiation I see in the landlord/tenant context occurs when a tenant can no longer afford rent. Rather than go through the cost of litigation, if you have a cooperative tenant, it can be quite beneficial to renegotiate that tenant's lease such that the tenant is paying what he or she can afford (so you aren't getting nothing), while agreeing to allow you to terminate the lease pretty much immediately upon finding a new tenant. This is an especially popular approach to disputes in the commercial landlord/tenant field.
Conclusion
When a contract no longer becomes practical or possible to follow, renegotiation is usually a better option than a straight breach. You benefit from avoiding the stress of being sued while the other party benefits from avoiding the hassle. You just have to accept that the other party always has the right to say no. If you are involved in a contract that you cannot continue to obey and want to attempt to renegotiate it, feel free to call (703)281-0134 or e-mail me at sleven@thebaldwinlawfirm.com to set up a consultation. Our initial consultations are free for up to half an hour!
Introduction
When we sign contracts, usually we intend to obey them, but the fundamental problem with contracts is that we do not always know what the future holds. Sometimes events beyond our control stop us from meeting our contractual obligations, sometimes a contract proves a good idea in theory but not in practice, and sometimes a contract just becomes outdated. Whatever the reason, sometimes it becomes unreasonable or impossible for you to obey a contract you signed. Rather than just breaching the contract and waiting to be sued, however, you have another avenue available - attempt to renegotiate the contract.
In today's blog post, I'll cover some of the basic pitfalls and advantages surrounding renegotiation of contracts.
The Defaults Have Changed
Perhaps it is obvious, but the reality is renegotiating a contract is not the same as negotiating an initial contract. Perhaps the biggest difference is that the default arrangement (what occurs without an agreement) is different. Initially, if talks break down, there's no relationship developed, and each party can go on their way. In a renegotiation, if talks break down, then the original contract is still in force. This tends to cause the party wanting the renegotiation to be at a bit of a disadvantage - you have to convince the other party that a new contract is better for them than the old contract, not just better for you.
In many cases, however, this is not as hard as it may seem. Litigation is expensive, and collecting judgments takes a great deal of time and effort (see my blog post on collecting judgments for more on that). Worse yet, if one of the issues is that you are becoming insolvent, the other party knows you could always declare bankruptcy, and they'd be stuck with nothing. So you can overcome this disadvantage, but it's important you know at the outset that you are at an inherent disadvantage.
The Rules for Determining if a Contract Exists May Have Changed
You probably know that there are two types of contracts: written and oral. There is actually a third type as well, an implied in fact contract (where there was never an express agreement between the parties in writing or orally, but the conduct of both parties indicates that they both understood a contract to exist [or, maybe one party made an offer, and the other, instead of accepting the offer, acted in a manner to indicate he had accepted the offer]). Normally, all three types of contracts are fully valid and enforceable by a court so long as you can prove that the contract exists (and your suit was filed within the relevant statute of limitations).
Many written contracts, however, especially more complicated ones, have modification clauses. These modification clauses lay out the rules for how that contract can be modified. A typical modification clause will say that the modification "must be in writing signed by the party against whom enforcement is sought." This means an express oral agreement, or an implied in fact agreement, which changes the original contract is automatically invalid. Instead, the party against whom you are trying to prove the original contract was changed must have signed a written modification.
Some modification clauses go even further and require that it "must be in writing signed by all parties." In those cases, even a writing signed by the other party is insufficient. Some go even further and say "must be in writing signed by all parties under the same formality as this agreement." So, if you have that and the original contract required all parties to sign in front of a notary, the modification is not valid unless all parties sign it, too, in front of a notary.
Your modification clause (if there is one) is very important to know when you renegotiate a contract. You need to make sure it is followed, otherwise all your hard work to renegotiate may be for nothing.
Offering Concessions
The reality is, if you want to renegotiate a contract, you need to be prepared to make some serious concessions, especially if the other party does not really want a renegotiated contract. So, if your problem is that you cannot pay, for example, then you probably need to give up some of what you are paying for. A common renegotiation I see in the landlord/tenant context occurs when a tenant can no longer afford rent. Rather than go through the cost of litigation, if you have a cooperative tenant, it can be quite beneficial to renegotiate that tenant's lease such that the tenant is paying what he or she can afford (so you aren't getting nothing), while agreeing to allow you to terminate the lease pretty much immediately upon finding a new tenant. This is an especially popular approach to disputes in the commercial landlord/tenant field.
Conclusion
When a contract no longer becomes practical or possible to follow, renegotiation is usually a better option than a straight breach. You benefit from avoiding the stress of being sued while the other party benefits from avoiding the hassle. You just have to accept that the other party always has the right to say no. If you are involved in a contract that you cannot continue to obey and want to attempt to renegotiate it, feel free to call (703)281-0134 or e-mail me at sleven@thebaldwinlawfirm.com to set up a consultation. Our initial consultations are free for up to half an hour!
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