Do you own a piece of real estate and are looking to sell it here in Cherokee County, and you’re thinking about filing for divorce? Today, we are going to talk about the five things that you need to think about ahead of time before you make the decision to either sell that property or file for that divorce.
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So, today’s discussion covers five essential considerations before initiating divorce proceedings in Cherokee County, focusing on real estate aspects to ponder if you’re heading down this path. Even in amicable divorces, it’s important to anticipate potential complications during negotiations, as human nature can lead to unforeseen challenges along the way.
- Automatic Stay
The first consideration is when you initiate divorce proceedings and it becomes active, a legal measure called an Automatic Stay is placed on the property title in Cherokee County. This prevents either party from making significant changes to shared assets, such as real estate, without the court’s authorization. So, if a couple plans to sell their property and seeks advice from a Title Attorney, they may find that a divorce case involving the property is pending. This situation creates what is commonly referred to as a “Cloud on Title.” As a result, the transaction cannot proceed without approval or intervention from the court. Title vs Mortgage
It is entirely possible to be on Title and not be on the mortgage. It’s also possible to end up giving up your interest in the Title and still be responsible for the debt on the property. So, what does that look like?Let’s say both parties use their income to qualify so they’re both on title and they’re both on the mortgage. In the divorce situation, one party gets to keep the house - let’s say it’s the wife. The wife is keeping the house and she wants to stay in it. So, that’s your scenario. The husband was on the mortgage at the time they did it, he “Quitclaims” his interest and moves on with his life. He goes to secure a new mortgage to buy his own house. Yet, upon application, they point out that he still holds an existing mortgage. He explains, “My wife received that property in the divorce.” Nevertheless, he remains liable for the existing mortgage.
Thus, another step has to be considered. Do you - in the agreement, negotiate to say she gets to keep the house, however, she has to immediately refinance the house? She has to refinance the house within 6 to 12 months. These things need to be taken into consideration because it will affect your debt to income.
Assigning Seller in Settlement
If both parties agree that neither of them will keep the house and it needs to be sold, as part of the divorce proceedings, you can negotiate and determine who will be the decision-maker during the sale process. Additionally, you can specify in the agreement which real estate agent you will hire to handle the sale.There have been many scenarios where divorces have taken place and I was listed as the agreed-upon agent because both parties trusted me to be able to do the transaction and keep them both equally informed while navigating this difficult process.
So, you can agree on that upfront. It’s beneficial because if it’s included in the agreement, then when emotions are heightened, it’s already established, so there’s no need to change the course of action.
Be Careful Transferring Title
Let’s revisit the scenario where the wife is keeping and being awarded the house after divorce. It’s common to find divorce papers assigning ownership to one party, like the wife, while the other, such as the husband, agrees to give up their share. However, sometimes they fail to formally transfer ownership solely to the wife by signing a Quitclaim Deed. So, if the wife plans to refinance or sell the property, even with sole authority granted by the agreement, complications may arise unless the Cloud on Title is specifically addressed. We’ve encountered cases where the wife aims to sell, but the husband who is still listed on the title, is unresponsive or uncooperative. We, as a real estate agents, need both sets of signature because they’re both showing up on Title.Now, what often happens in that case is they will provide us a copy of the divorce decree and we will send that to Thomas and Brown (Title Atty) to review. If the language is drafted in a specific manner, they can use the decree to resolve the title issue, enabling the wife to sell the property solely with her own signature.
However, in many cases, although the decree awarded ownership of the house to the wife, the transfer of title was not executed. In such situations, we’ve had to secure cooperation from the husband or obtain a Quitclaim deed, or similar documentation, to assist the attorney in finalizing the title transfer.
It is always helpful to consult with an attorney on the front end to make sure that you get this done right. Now, obviously in a divorce situation, you want to consult with a divorce attorney but you might also want to talk to a real estate attorney to find out what needs to be done with the title - either in the divorce process, or before the divorce process, or once the decree has been issued on the back end because those are the three possibilities.
Splitting the Cost
If you’re not going to sell the property before the divorce is filed, and you’re going to do it during the process and cooperate with each other, it is entirely possible to split the cost and the expenses that need to go into the house to achieve the results you want.For example, let’s say a house ends up needing $15,000 worth of repairs and only one party has the money to be able to do that and at the end of the day it’s agreed that the proceeds will be split. You can, with your attorney’s help, document the contributions made and by whom, ensuring that the party who provided the $15,000 is reimbursed or that amount is deducted from the net proceeds before the split takes place. What I mean is, if you’re dividing the proceeds evenly at 50/50 and you’ve contributed $15,000, you should first recover that $15,000 expense before splitting the remaining $100,000 proceeds between the two of you. That can be done; it just needs to be documented properly.
My final words on this is - I’m not an attorney and I don’t give legal advice. I only give real estate advice and not real estate law advice. We refer real estate attorney business to Thomas and Brown. If you have a need to have a consult to ask about how your property is affected, speak to your divorce attorney and you can speak to Thomas and Brown as a title attorney that transfers title on property to talk you through some of the pitfalls.
If you’re looking to work with a real estate agent who knows the divorce process works, one who collaborates closely with your divorce attorney and a closing attorney to ensure seamless title transfer, then give us a call or CLICK HERE to get in touch. We will put together a free consultation to talk about the situation and the possibilities so, we can find the best win-win situation for you!
Divorce is never fun, it’s often expensive, and you still can find a win-win outcome for you and your family to be able to move on, deal with the property, and create a win-win situation out of a situation that’s unfortunate.
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