Court Invalidates Property Settlement Agreement Due to Mental Incapacity

The Virginia Court of Appeals recently ruled in the matter of Bailey v. Bailey and invalidated a property settlement agreement  signed by both Mr. and Ms. Bailey. 

Ms. Bailey, seeking a divorce, sought Mr. Bailey's endorsement of a property settlement agreement.  The terms of that agreement awarded all marital assets to Ms. Bailey and apportioned all marital debts to Mr. Bailey.  At the time he endorsed the settlement agreement, Mr. Bailey was on short-term release from treatment for schizoaffective psychotic disorder. 

The Court of appeals determined Mr. Bailey lacked the requisite mental capacity to endorse the property settlement agreement.  Virginia law subjects property settlement agreements to the same standards as contracts.  A party to a contract, however, must have the mental capacity at the time to understand the nature and provisions of the contract.  At the time, the evidence showed Mr. Bailey believed he was signing paperwork allowing him to go home.  Accordingly, the trial court and Court of Appeals determined Mr. Bailey lacked the requisite mental capacity to contract and thus invalidated the property settlement agreement.