Rule 69 Agreement: What Are The Basics?
In essence, an agreement under Rule 69 of the Arizona Rules of Family Law Procedure is a settlement agreement that allows for a child support obligation to be satisfied without the payment of monthly or periodic child support. Rule 69 Agreements are typically reached when the parties have a vested interest in their house and make payments of taxes, insurance, and maintenance on the home either directly or via an impound or escrow account. Parents can allocate the obligations related to a family residence by agreeing for one parent to pay for the home while the children are living there rather than through direct payments of monthly child support. The Rule 69 Agreement then works as an alternative method in which to pay child support to provide for the care of the children. For example, one parent may agree to pay the mortgage and the other parent to cover the taxes, maintenance, and insurance even if the home is lost to foreclosure.
It is important to note that a child support payment is always intended to be used for the benefit of the child. This is why typically courts will not allow a parent to pay for a family home and get credit toward their child support obligations unless a Rule 69 Agreement existed. Essentially, with a Rule 69 Agreement in place, the parents are simply recasting their child support obligations as mortgage, insurance, and maintenance costs paid for by one parent .
While it is always important that parties alter their support obligations or property division only through a Rule 69 agreement so that the Court can later enforce the agreement as the parties intended, these agreements can significantly reduce the cost of a divorce. Courts have the authority to enter an order of support pursuant to the parties’ written agreement so long as the parties filed a child support worksheet and their agreement later had to be enforced. When parties have earned income in excess of the presumptive minimum amount, they can use this form of support in place of regular ongoing periodic payments received in cash, reducing the financial burden on parties to make regular payments in the case of adults with fluctuating income or those with reasonable goals of retirement. A parent unable to pay regular monthly support under normal circumstances could use Rule 69 agreements to provide for the care of their child by making payments to the family home, but they cannot later recast this agreement once they have the ability to pay.
The Rule 69 Agreement may not reduce the total support obligation incurred by a parent, but it does allow the parent to pay a more manageable amount in the place of regular periodic support. Furthermore, Rule 69 is a great tool for parents who have a vested interest in the families home and share that interest peacefully for the good of the family.
Rule 69 Agreement Law in Arizona
Rule 69 Agreements are principally governed by Arizona Revised Statutes ("A.R.S.") § 12-1591. Rule 69 of the Arizona Rules of Civil Procedure ("Rule 69") is the rule governing the procedures for judgment enforcement. A.R.S. § 12-1591(A) expressly provides that "[p]roceedings in aid of execution shall be administered in accordance with the necessity, discretion and established practice in equity." Section 12-1591(B) provides the procedure for a claimant’s application for a writ of garnishment and § 12-1591(D) governs the time for the writ to be served. The statute establishes a clerk’s filing fee and an affidavit number that the claimant must cite in the application. See § 12-1591(C). Under A.R.S. § 12-1593(A), it is only upon serving the writ of garnishment that the garnishee is bound to comply with the statutory mandamus remedy. Section 1593(B) states that the writ "shall require the garnishee to answer interrogatories under oath unless the garnishee already has answered the interrogatories and the judgment creditor has served upon the garnishee a copy of the previously answered interrogatories." Section 1593(C) clarifies that the garnishee must respond to the interrogatories "within ten days pursuant to the terms of the writ and shall hold and retain in its possession or control all goods, effects and credits, moneys, debts, choses in action and effects of every kind which are described in the writ and which the garnishee owes or holds, or which may be due to the defendant from the garnishee." Section 1593(D) provides that failure to comply with the writ subjects the garnishee to being liable for the full value of the goods, effects, credits or moneys no effect or indebtedness owed by or to the garnishee to or from the defendant at the time the writ is received.
Rule 69 Agreements Utilized Commonly
Common Uses of Rule 69 Agreements in Arizona
Rule 69 agreements are typically used to divide a husband and wife’s community property in a formal divorce action. However, it is not uncommon for a person wanting to rely on a Rule 69 agreement in order to divide community property without filing a formal divorce. For example, an agreement may be entered into during a highly contested legal separation where both parties want to remain legally married for tax purposes or some other reason.
A very recent Arizona family court case (October 2015) highlights the importance of a Rule 69 agreement in the context of a legal separation that ends up being amended to a divorce.
The facts of the recent case:
The wife wanted to remain legally married to the husband for tax purposes. The husband wanted, as a practical matter, to be divorced so that if he died before the wife the wife would not be able to retain a claim to his social security benefits at the enhanced married level.
The family court could not see the benefit in having a legal separation.
So, the family court essentially forced the parties to live with a legal separation (a kind of quote "you can’t get divorced avoid divorce as much as you can" ruling).
The end result? – an Arizona appellate court had to step in to rectify the entire situation by ordering the family court to comply with the letter of the law concerning Rule 69 agreements.
This means that a legal separation is such a legal divorce without the legal stamp on it. Overwhelmingly, I believe it is much more efficient to file a formal divorce action and move forward from there rather than trying to, as a matter of counterpart, negotiate a legal separation and then amend that legal separation to a formal divorce action. The family courts will invariably exercise their broad discretion to avoid a divorce unless there is a signed Rule 69 agreement in place.
Bottom line—if you ultimately want to divorce your spouse—it is far more efficient and practical to file a divorce action and then refer to a Rule 69 agreement than to try to negotiate and draft a legal separation.
Rule 69 Agreement Requirements
There are two things for a Rule 69 agreement must have in Arizona:
1. Consent or approval of the Court – both parties must consent to the settlement and the terms must be approved by the Court. This ensures that the terms of the settlement are fair and reasonable to both parties
2. Signature of the debtors and creditors lawyer – this is to ensure that your creditor lawyer has reviewed and approved the settlement terms.
Once a Rule 69 agreement is approved by the Court, it becomes a binding contract upon the creditor that is enforceable by Court order.
Rule 69 Agreements Pros and Cons
A Rule 69 agreement holds both significant benefits and drawbacks. The agreements provide a forum where spouses can attempt to reach financial and physical custody agreements about their children. The parties can set their own guidelines for calculating child support, parenting time, and all other issues. A Rule 69 requires a judicial order following the submission of the signed agreement. However, the parties are free to negotiate the ultimate order and are not bound by any other rules.
The other great advantage is that it expedites the process and allows the divorcing parties to divorce on their own terms without the intervention of judges, magistrates, referees, and commissioners . It also allows the parties to keep costs down and gets the couple divorced more quickly.
That said, these agreements do not come without risks to both parties. The primary problem with the Rule 69 is that it is an order of the court. When an agreement covers financial matters, it can be the subject of future litigation if one party becomes dissatisfied and tries to renegotiate the terms of the agreement later. There are safeguards to prevent this, so long as all terms of the agreement are met.
How to Set Up a Rule 69 Agreement
After gaining an understanding of what a Rule 69 agreement is, it is important to know how to draft one. The following details what a Rule 69 agreement requires in Arizona for it to be binding on all parties so that the agreement can be presented to a judge for review:
Step One: Preparation
In order to draft a Rule 69 agreement, first, all attorneys that represent each party involved must prepare a draft for review by all attorneys that represent a party. This means that every attorney for every represented put their input into the agreement, so that all parties are properly represented and have provided input on how the agreement will be drafted. Failure to do this can result in the judge rejecting the agreement and requiring further negotiations.
Step Two: Timing
Depending on the complex nature of your family law case, the agreement could be very simple, or very complex. It is necessary to begin negotiating and drafting the Rule 69 agreement immediately after the first mediation session. For more complex cases, this could mean negotiating through several mediation sessions and potentially over the course of several months. Regardless, of the complexity of the case, in order to avoid a delay in your case, you should enter into a Rule 69 agreement as early in the process as you can so that another continuance is not required in order to complete the agreement.
Step Three: Review Process
Once all attorneys have agreed to the language of a Rule 69 agreement, and all parties have signed the agreement, it is time to present to the judge to review. If there are minor adjustments that are required, the judge may be able to make modification to the final agreement and approve. However, if there is something significant that needs to be changed, you may need go back to the drawing board. If the judge must make several changes to the agreement, it is likely that the judge will require the parties to go back and negotiate amongst themselves in order to modify the agreement and then present a final copy to the judge to review and approve.
Rule 69 Agreement Enforcement and Remedies
Rule 69 agreements can be enforced in an Arizona family law court in several ways. If the parties participate in the family court system, the agreement will be incorporated into a family court order through the entry of a consent decree. The consent decree will detail the parties’ obligations and duties that they owe to each other. An enforcement motion can be filed with the court if one of the parties list their responsibilities under the consent order. Simply put, any non-compliance with a Rule 69
Generally speaking the judge will have a short hearing to determine if the obligation is being fulfilled and if not, a new order will be entered to enforce the agreement. If one party reneges on the deal, the other can file a contempt motion.
If agreement is not complied with , the other party may bring a motion for contempt or specific performance to compel the complying party to obey an agreed order. Child support payments are typically dealt with through the State’s Division of Child Support Enforcement (DCSE) agency that seeks to obtain child support from an employer and remit the same to the parent. The agency’s function is similar to the old garnishment subpoena. As such, a motion to enforce support order entered would be filed with DCSE and an enforcement hearing would be held by a hearing officer. If the matter is in the family court system, a motion to enforce child support motion will be held before a family court judge.
Because Rule 69 agreements are incorporated into an agreement of consent meaning the parties are in agreement with the terms and conditions, a determination of contempt is the likely outcome. This means the matter may not even go to hearing if all parties agree.