Question: I found a great home on a “for sale by owner” website. The owner is going though a divorce. According to the current deed, he is the only title holder, but the couple was married when he purchased. What affect will his divorce have on my purchase? How could divorce prevent the sale?
Answer: Your seller’s divorce is a major issue, and you are wise to question its effect on your transaction. This is another reason why legal counsel is needed with “for sale by owner” transactions. Normally, a realtor will filter these situations from the market, by researching such information from the start.
Occasionally, I meet a husband trying to refinance his family home behind his wife’s back, in order to fund a crazy business venture or to pay various debts. These men are always mortified to learn they actually need their wife’s permission to make such a financial decision. Because lenders do not want their rights jeopardized by a claim for fraudulent conveyance by an unknowing spouse, they require the written assent of all titleholder spouses. Your instance is similar despite the fact that the wife is not a titleholder.
Because a complaint for divorce was filed, an automatic restraining order issues preventing the conveyance or encumbrance of any marital assets. This is to prevent vindictive spouses from looting money or assets from the failing marriage. In determining if the home qualifies as a marital asset, the wife’s individual ownership has little influence, as many families will place title in one spouse’s name for various strategic purposes, such as creditor protection. As a result, it remains an issue for the probate and family court to decide, as to whether he has the right to sell without his wife’s consent. Until you see a court order authorizing the sale, or unless the wife joins as a party to the sale, you should not pursue this transaction.
Attorney James Haroutunian invites questions from readers and real estate agents at 978-671-0711, www.prioritylaw.com, or by email at firstname.lastname@example.org.