Why should a REALTOR® be concerned with whether the Seller is a party to a pending divorce?

Whenever a party with title to or an interest in property is involved in a divorce or dissolution of marriage proceedings, it is necessary to determine the legal effect of the proceedings on the title to the property.
WHY is that?
Because most real estate (especially a “marital residence”) will be considered a “marital asset” in determining the division of assets in a divorce.
AND ….
One spouse may actually want to keep the home or property. Selling the property and dividing the proceeds will not always be the final decree regarding the property. The actual property may be awarded to one or the other.
Even the spouse who is NOT an owner of record – who is not on title to the property – may well have an equitable interest in the property, based upon the equitable division of assets.
Satisfying that interest and properly conveying title to the property will likely require a signature or other cooperation even from a spouse who is not on the title to the property.
VERY IMPORTANT - Improper handling of a property which is the subject of a divorce proceeding can result in the invalidation of a sale and subject the parties to significant liability; and – in some cases – the Court can order that the title to the property revert back to one or other of the selling spouses. It could be taken from the Buyer.

Agent Pro Tip
Please ask ALL Sellers if they are in a pending divorce or whether a divorce could be filed during your Seller Engagement term. Even two seemingly happy Sellers, who both work well with you (and each other) during the sale process, may be going through a divorce and never tell you about it unless you ASK. Sometimes one side of the divorce proceeding will file a Lis Pendens in the public real estate records indicating that parties’ claim to the property or proceeds of sale. BUT there is not always a Lis Pendens filed – so without knowledge from your Seller that a divorce is proceeding, the Closing Attorney may never receive this important information.

But if a Divorce is Public Record, won’t you find it during a title exam anyway?
NOPE. Not unless the attorney is tipped off or directed to “go look” for the Divorce decree in the Superior Court Civil complaint filings. This is an entirely separate index, database and recording forum from the real estate records. Civil Complaint record searches are not a part of a title exam under the Georgia Title Standards. Also – the divorce could have been filed in any one of Georgia’s 159 counties. We cannot search them all! And finally – the parties may be “in the middle of a divorce” even if there is no formal public record filing yet. They could still be in the pre-filing stages.

To determine whether, and HOW, a decree of divorce or dissolution of marriage will impact title to property and closing, we must ascertain:

1. The validity of the decree: a. The court must have jurisdiction over the subject matter of the action under state law b. Did the court have jurisdiction over the parties to the action? We must be satisfied that the spouses make a personal appearance or waiver or be personally served in the divorce. c. Does the court have jurisdiction over the land? We cannot rely upon a divorce decree divesting and vesting title if the land is not located in the state where the court is located (an out of state divorce where GA property is involved) d. Is the decree final? Is there any possibility of appeal or review? Do not rely upon decrees which are not final unless the parties agree to the substance of the decree.

2. The nature of the interest held in the land: a. Title is held by one spouse only b. Title is held by both spouses as joint tenants c. Title is held by both spouses as tenants in common d. Title is held by both spouses as community property [not in GA].

3. Does the decree itself effectively terminate the interest in the land of one of the parties by adjudicating it to the other? If the decree sufficiently vests title in the other spouse, a certified copy of the order must be filed in the clerk's or recorder's office in each state to constitute constructive notice. NOTE: Most Divorce Decrees do not effectively pass (vest) title (within the Decree) from one spouse to the other.

4. Whether the decree orders one of the parties to convey that party’s interest in the land to the other a. If the decree does not sufficiently vest title in one spouse by other provisions of the decree, we require a deed from the other spouse if the decree orders a conveyance (IE, “wife shall quitclaim her interest in the marital residence to the husband”)

Blog Source: Hartman Law