Divorces are often difficult for all parties involved, but selling the property can be easier with these tips. The first step for property owners who need to sell due to divorce is finding and agreeing on a real estate agent. When an agreement is reached, the title company will need detailed information regarding the following:
- Are the owners still legally married? The answer to this question affects the title search and how judgments are handled. Typically, married couples take ownership as tenants by the entirety with the right of survivorship. Tenants by the entirety allows the property to automatically pass to the surviving spouse. It also provides creditor protection.
For example, while the couple is still married, the husband buys a new motorcycle in his name and stops making payments. When the motorcycle company gets a judgment against him regarding defaulting on his payments, that judgment does not attach to the property.
If the divorce has already occurred, the tenants by the entirety protection does not apply, and the couple becomes tenants in common. Once the divorce decree is entered, the judgment attaches to the property. This is important because if the judgment is attached, it must be paid off at closing.
Ideally, selling the property before divorce is beneficial to both parties when properly handled.
- When is the closing? Scheduling the closing when it’s convenient for both parties is always the goal, but having individual appointments for each spouse is typically recommended. Sellers don’t have to wait until closing day, so there are often several options for closing appointments. Closings can be done at different times and in other offices so that documents can be signed separately. Even in the most amicable divorces, emotions can run high, so individual appointments are recommended for the best interest of both parties.
- How are the proceeds being split? A property settlement agreement between the parties may already state how profits will be distributed. If so, the title company will need a copy of the agreement. We recommend presenting the agreement to the title company early so documents can be prepared and reviewed to ensure the proceeds are being split correctly. The goal is to get to the settlement with all parties in agreement on the proceeds split so there aren’t any delays or surprises. When that is accomplished, proceeds will be disbursed accordingly.
Some parties want to know if the title company can hold the proceeds until they reach an agreement. The answer is typically no at Highland Title + Escrow and many other title companies. There is no guarantee that an agreement will be achieved. If proceeds need to be held, it’s typically done through one of the divorce attorneys or a joint account.
Please contact us here if you have more questions regarding title and divorce.