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Oral Stipulations Still Not Binding


Previously, we have written about the use of stipulations in a case to maximize efficiency and what is required in an oral stipulation in the context of Equitable Distribution. (Our courts have held, for an oral stipulation on Equitable Distribution to be valid, that the parties must be read the terms of the stipulation and questioned as to whether they understand the legal effect of the agreement and then agree. McIntosh v. McIntosh, 328 S.E.2d 600, 74 N.C. App. 554 (N.C. App. 1985)).

A new case just handed down on September 7, 2021, reiterates many of those same principles. There, the parties were attempting to distribute many of the marital assets. One such asset was Zimmerman Vineyards, LLC. At the trial level, the parties stipulated that:

The parties agreed and stipulated that number one (1) on Schedule I, and number two hundred fifty-seven (257) are the same, and the [trial court] could classify, value and distribute these assets together under Schedule I. The parties further stipulated and agreed that the 138.48 acre[s] of real property consists of three tracts of land which are all titled in both names of the parties as of the date of separation. Two of the three tracts were acquired after the date of marriage, were held as tenancies by the entireties, and existed on the date of separation. One of the three (3) tracts was acquired by [Norman] prior to the date of marriage, but title to this tract was later converted to a tenancy by the entirety by [Norman] after the date of marriage, and thus was a gift to the marriage. Therefore, all three tracts are classified as marital property.

Number 1 was two tracts of land, and Number 257 was Zimmerman Vineyards. But according to Defendant, who appealed, this stipulation did not exist on the record. Plaintiff had questioned Defendant, who was unrepresented by counsel and clearly not following the proceeding. Plaintiff represented to the court about lumping the land and the business together as one asset for purposes of valuation and distribution. The trial court never made an inquiry regarding whether Defendant understood that the land and business were being lumped together and what effect that would have on his case. Without that inquiry and agreement on the record, it was error to lump the two together. Accordingly, the court of appeals then vacated that portion of the Judgment and remanded so the trial court could value the land and business separately.

So again we see that the Court should not allow these types of ghost stipulations. The intent is to provide some harbor against fraud or overreaching, especially in cases where one party is unrepresented. If no such written stipulation is in the record, an oral stipulation must follow a strict inquiry as outlined in the McIntosh case.