Earlier this month, I made a presentation to a group of local real estate agents about some of the legal issues surrounding real estate transactions involved with divorces. What follows is the second third of a set of notes I wrote for the presentation handout, offered here because the information is as important for the owners as for the agents. Part 1 can be found here, and Part 3 will address post-judgment transactions and related issues.
III. Restrictions During the Pendency of Dissolution Actions: Statutory Financial Restraining Order (a copy can be found here)
A. During the pendency of a divorce action, both parties are subject to a statutory financial restraining order (linked above) that prevents sale or transfer of property without either express mutual agreement or court order. Some attorneys will file a motion for a court order that formalizes this restraint and creates additional sanctions for any violations.
B. Sale of real estate during a divorce proceeding is nonetheless easily accomplished as long as all parties are in agreement. Typically, a joint letter from the attorneys or parties will suffice to bypass the restriction of the statutory restraining order. In some cases, however, the title company will insist on having a court order signed by a judge specifically permitting the sale.
C. The smart realtor will streamline communication between the parties and find out from the title company what they require prior to closing.
D. Repair costs: typically, the parties will agree to split the cost of repair or cleanup of property to facilitate sale, with an agreement that the party fronting the cost will be reimbursed out of closing proceeds. This should be confirmed in writing. This is an area where guidance from the realtor is very helpful and attorneys frequently agree that the parties must abide by recommendations from the realtor. Make sure the rules of the road are very clear going into this process so you don’t get caught in the middle of disputes between the parties.