Closing the Deal While Getting Divorced

//Closing the Deal While Getting Divorced

Closing the Deal While Getting Divorced

So, you’re almost there!  You made it through choosing a Realtor, getting your home ready for market, marketing your home, getting an acceptable offer, going through escrow, and now you’re ready to close the sale of your home.  What next?

Well hopefully your team has already prepared you for the next steps.

  • Escrow closing: This is when the title transfers from you to the buyer.  
  • Dividing the Proceeds:  The instructions for the division of proceeds should already be in escrow.  Let’s just talk about this for a second.  Typically, there are 3 ways escrow gets the instructions for proceed distribution:
    • In a divorce, there can be a court order from the judge that will dictate this distribution.  Which will supersede any agreement that was made privately between you and your spouse.  Escrow will follow the court order.
    • If you and your spouse have not filed yet, AND you have a written notarized agreement stating how you both want the distribution to be delivered, escrow will follow those distribution instructions.  If, however, you have filed and have not reached the point of a court order yet, then check with your legal counsel.  In some cases, any agreement between you and your spouse may still need to be signed off by the court.  
    • In the absence of a court order, or a written agreement to the contrary, escrow will distribute the proceeds to everyone on title.  Example 1: If just you and your spouse are on title, then escrow will cut one check made out to both of you.  Example 2:  If you and your spouse and your in-laws are on title, then one check will be made out to all the names on title.  Sometimes in a divorce cashing this check can be a challenge.  If you think it will be difficult to get all parties to cooperate in cashing this check, then a written agreement might be helpful.  Again, check with your counsel for any and all legal advice.  
    • Non-distribution.  In the case where a court order is imminent, or an agreement is in the court for review, but the sale needs to close for one reason or another.  Escrow may be asked to hold the proceeds pending distribution instructions that will be forthcoming.  Escrow may in turn ask that one or the other attorneys involved hold the funds in their trust account.  
  • Moving:  By now you should know where you’re going, or have a rent back agreement, or you should already be in your new place.  Hopefully your Realtor was a life saver here!  They helped you get a new place and that’s fabulous.  More importantly they helped you negotiate terms on the sale of your home that relieved most of the stress related to closing and moving.  Depending on your circumstances and your needs, your realtor should have negotiated one or more of the following options:
    • If you didn’t need the proceeds of your sale to move, they helped you find a place.
    • If you did need those proceeds to move, they negotiated:
      • A simultaneous close.  It’s actually not simultaneous, but that’s what we call it.  It really looks like this:
        • Your buyer’s lender funds their loan for their purchase of your home on Monday,
        • Close the sale of your home on Tuesday, and escrow wires your share of the proceeds into the escrow account of your purchase on Wednesday
        • Your bank funds the loan for your purchase on Thursday,
        • Close your purchase on Friday, and
        • You move over the weekend
        • Now the buyer has owned the house since Tuesday, but your Realtor negotiated that you can stay for 7 days so that you can close the purchase and have the weekend to move.
      • Rent back – In the case where you need to close the sale of your home, but you have not found a replacement property.  Your Realtor may negotiate a rent back from the buyers.  Wherein you have a specific time to find a replacement property and move.  The rent is usually calculated at the buyer’s Principal, Interest, tax, and insurance, plus any applicable HOA fees.  Rent is deducted from your share of the proceeds up-front, and is usually calculated on a daily basis.  EX: If you have a 90-day rent back, but it only takes 30 days for you to move out, then, as part of the negotiation, you might be entitled to 60 days rent return.  You can see that this would most likely give you incentive to move quickly.