As if short sales are not already hard enough for the buyers and sellers, why not make it harder? Divorce is tough on everyone including the buyers of a home in this situation. Many questions should be asked by your agent regardless of which side of the transaction you are on.
In the state of Minnesota it takes 1 to buy but 2 to sell. Meaning a person can be married and buy as many properties as they want without involving their partner. However when it comes to selling any of them, that spouse has “marital interest” and must sign off on the sale of the home. The question that needs to be asked from the list side is what is in the divorce decree? What does it say will happen upon the sale of the home? On the buy side your agent should ask the same question of the listing agent.
The impact of this information could help to avoid a deal from falling apart at the closing table. It would give everyone involved in the transaction an opportunity to negotiate any issues ahead of time, as well as the title company along with it’s closers to have all of the proper paperwork drawn up.
Example- Mr. & Mrs. seller got divorced 5 years ago and in the divorce decree it states when Mrs. seller decides to sell the home in the future, $5,000 of the the remaining equity shall be paid to Mr. seller. Sounds simple enough right? Not really because when the divorce was drafted the home at the time was worth about 20% more. Now 5 years later Mrs. seller has lost her job and can no longer make the payments. On top of that she owes more than the home is worth. When the short sale is final there is no money left to pay the $5,000 to Mr. seller as agreed to in the divorce decree. So now at the last minute Mr. seller refuses to sign because he wants the percentage of equity that he is entitled to according to the divorce decree. Without his signature the sellers can not give clear title to the buyers. Now the deal falls apart and the seller has to start all over if the buyer walks. Not to mention all the time and money lost by the buyer preparing to purchase the home.
This situation can possibly be avoided by having all of this information ahead of time. So when considering the purchase of a home you want the agent that is representing you to ask as many questions as they can on your behalf, as well as have a good understanding of many different situations and the impact they can have on a transaction. Do yourself a favor and always hire a full time professional Realtor.