An all-too-common scenario involves the separating couple who prepare their own settlement agreement which contractually resolves all of their issues – everything from custody and support, to property and debt division — only to find out months or possibly years down the road that their agreement is defective and unenforceable. Often, the parties only learn of the problem when one of them starts a divorce action, and an application is made to set aside the agreement as unenforceable. If successful, the court sets aside the agreement and the parties have to start all over again negotiating the terms of a new settlement – or worse, go to trial.
In New York, out-of-court agreements settling marital issues can be set aside for numerous reasons, including unconscionability, duress, fraud and mutual mistake. But with homemade agreements (as well as agreements prepared by some mediators and legal document prep services) even an even-handed agreement can fail for a technical defect. The Domestic Relations Law provides that any agreement between spouses made before or during a marriage will be “valid and enforceable” if it is in writing and signed by the parties before a notary public with a special form of notarization called an “acknowledgement” (see, DRL sec 236B). If an agreement does not contain these components, at a minimum, it can be set aside or vacated, by application to the court.
Signing a written agreement seems obvious enough. But acknowledging the agreement? Not so much. The proper form of acknowledgement is defined by New York State Real Property Law, since this is the notarization method used to transfer real estate, and is commonly encountered on the standard pre-printed deed. The form is prescribed in the statute as follows:
On the ____ day of ____ in the year ____ before me, the undersigned, personally appeared ____, personally known to me or proved to me on the basis of satisfactory evidence to be the individual(s) whose name(s) is (are) subscribed to the within instrument and acknowledged to me that he/she/they executed the same in his/her/their capacity(ies), and that by his/her/their signature(s) on the instrument, the individual(s), or the person upon behalf of which the individual(s) acted, executed the instrument.
(Real Property Law 309-a).
Before concluding that a quick cut and paste of this paragraph to the back of a settlement agreement will do it, a quick read-through should make it clear that there is more than a mere form required. The notary has a lot to do. The spouse who signs an acknowledged agreement must do so in front of the notary, must prove his/her identity, and must attest that he or she is the person referred to in the agreement and that he or she signed the agreement. Of course, the notary must then sign with his or her identifying information (usually by stamp) on the agreement.
So what could go wrong? Sometimes, the entire acknowledgement page is missing. Numerous cases have tried to remedy the missing acknowledgement problem, after the fact, by arguing that the formality of the missing acknowledgement can be overlooked if there is no real question that the parties signed it. However, an acknowledgement that is completely missing cannot be cured, since the Court of Appeals, the state’s highest court, has ruled that the parties testimony in court admitting that the signatures were authentic is not the “functional equivalent of an acknowledgement, which involves both the oral declaration of the signer and the written certificate of the official establishing that certain prerequisites were met” (Galetta v. Galetta, 21 NY3d at 195  discussing Matisoff v. Dobi 90 NY2d 127 ). A missing acknowledgement also means that one of the major purposes of an acknowledgement is absent, since it fails to “impose a measure of deliberation and impress upon the signer the significance of the document” (Gulotta, 21 NY3d at 196).
More often, though, the problem is less obvious. Instead of a missing acknowledgement, the agreement contains a poorly drafted acknowledgement that may (or may not) contain the essential elements of the statutory acknowledgement. Anything even slightly short of the requisite components can be fatal to the validity of the acknowledgement, as the Galetta case recently demonstrated. In that case, the Court of Appeals concluded that the Husband’s signature on the pre-nuptial agreement was not properly acknowledged because the phrase “to me known and known to me” (the boilerplate language in effect at that time) was omitted, probably because of a typographical error. So, instead of Gary Galetta coming before the notary as someone who was, “to me known and known to me to be the person described in and who executed the foregoing instrument…,” he was merely “Gary Galetta described in and who executed the foregoing instrument…” Though it might seem impossible for the notary to have attested that Gary Galetta was the person who signed the agreement without having first identified him, the absence of language specifically spelling this out was enough for the Court of Appeals to conclude that the acknowledgement did not substantially comply with the requirements of Real Property Law 309-a.
All was not lost for Mr. Galetta, at least not yet. The Court of Appeals held out the hope that, if Mr. Galetta could prove that the notary actually did perform the essential tasks of an acknowledgement, that the defect in the language could be cured. Alas, Mr. Galetta turned out not to be so lucky. His notary could not remember him from thirteen years before. All he could say was that it was his custom and practice to “ask and confirm that the person signing the document was the same person named in the document” (Id. 21 NY3d at 197). In light of how exacting the language must be for an acknowledgement, it is somewhat ironic that this statement almost passed muster. But no – although evidence of a habit can be enough to prove that a specific act which can no longer be recalled was, in fact, performed, this notary’s testimony was not specific enough. Having failed to provide the detail of a specific procedure he followed to identify people he notarized, the Court rejected the notary’s statement, and held that Mr. Galetta could not cure the defective acknowledgement.
Other facts might have turned out differently. The take-away from Galetta is that a defective acknowledgement may be curable if it can be proved later that the notarization actually contained all of the elements of a proper acknowledgement, even if only some of them were written down. The notary can never be dispensed with entirely and the type of notarization must be an acknowledgement (not a “sworn to” oath taking, which is more common). It also helps if your notary can remember you years later, or at least has a well-defined habit of taking acknowledgements, assuming he or she does enough of them to even have such a habit. And then, it’s never enough to simply identify the signer. He or she must actually declare that it is his or her signature on the document.
Of course, it’s better to get it right the first time. Getting a form online, or relying on a paralegal or mediation service, may seem like a cost-effective option, but buyer beware. It could cost a lot more in the long run.