Your home may be the greatest single asset of your marriage. Since your home is an asset, it is subject to division according to your state's property division law. Colorado is an EQUITABLE DISTRIBUTION STATE. This means the parties decide what they think is fair and if they can't agree, the Court decides. It is not 50/50 like what Community Property states say.
Definition of Separate Property - What you bring into a marriage (and keep in your name). What you inherit during the marriage. What you receive as a gift during the marriage. These assets must stay in that person's name only. They can't be jointly owned.
Definition of Marital Property - Any property acquired by either spouse during the marriage regardless of how it's titled...from the start of marriage until the time it ends. In Colorado, it's also the increase in value of Separate Property.
If you are getting divorced and the house is in your name only and it was acquired during the marriage, you don't have the ability to sell if there is an impending divorce.
A majority of states have laws that when a divorce case is filed there is an automatic injunction (court order). Neither party can sell, transfer, dispose of, or encumber any marital property...unless there is a temporary order allowing it.
In addition to the automatic injunction, another problem that arises is the Notice of Lis Pindens. This is a written notice that gets filed that says there is a pending lawsuit affecting the title to the real property. Some lawyers will file and record this after the divorce case is filed saying there is a potential title problem. It's a cloud on the title once filed.
Example: Husband owns a property that's titled in his name only which was purchased during the marriage and lists the house with a real estate agent and the wife's lawyer finds out about it. They don't want the husband controlling the situation so the wife's lawyer files this notice. Once it's filed, there's no easy way to remove it. It would most likely require a court order and it still stays in affect for a while after in case somebody wants to appeal. When the wife finally decides she wants to sell, it will be hard to get rid of it. It will take weeks or months to clear.
From the time a case is filed until the divorce decree is finally entered, there is a gap called temporary orders period. It covers who lives where, who pays for what, where do the kids go, etc. Some work it out without help of the Court. If you want the ability to sell your house during this period, you have to get a temporary order permitting this. Ask your attorney to draft up an agreement that allows the sale of the property. Have it state who they want to list it, what the commission will be, how to handle disputes about the offer, price reductions, etc.
Husband and wife own a house. Wife is in house. Husband has order to sell the house. Wife won't cooperate with measurements, photos, showings, etc. Suggestion: Serve a Request for Entry Upon Land. Every state has different procedures. This will force the uncooperating spouse to cooperate.
To ease the process of the divorce, agree to these items up front.
1. Purchase price at or above $x
2. Close within xx days.
3. Seller concessions cannot exceed $x.
4. Inclusions (agree up front).
5. Parties agree to up to $x in inspection objection items.
6. Build in price reductions up front.
1 out of 7 divorces may results in bankruptcy shortly after the divorce is filed, or midway through, or at the end. If bankruptcy is filed, the transaction is DEAD IN THE WATER. The Bankruptcy trustee gets to decide whether or not the transaction gets to continue.
1. Sell the house up front and divide the profits.
2. One can buy the other out. This can be done by trading another asset for the interest in the home. The fair market value of the house minus the mortgage will show the equity in the house. Things to consider: Should you subtract selling costs from that figure? What about potential capital gains?
What if the wife wants to keep the house and there's not enough value in another asset to offset the value? She could refinance the house to withdraw enough cash to pay off the other spouse, but what if she can't afford the higher mortgage payment?
Instead of refinancing the house, she could owe a sum to her spouse, which is paid off over time (a property settlement note). A note should include reasonable interest and it should be collateralized with a deed of trust on the property.
Another problem with buying out the other spouse's interest is that the non-owner spouse's name stays on the mortgage. Even though the husband may quit claim the deed to his wife, his name remains on the mortgage. If she decides to stop making the payments, he is still liable. Something to consider.
Remind the lawyer or judge to put a time limit on when the deed must be transferred. What happens is this never gets done and down the road one party want to sell and the deed is still in joint names.
1. Easiest way to correct is contract spouse, prepare the deed, get it signed, and filed.
2. One party is dead (worse case scenario). Probate may or may not have been opened. There may or may not have been an administrator. If there is no estate and no administrator, you have to open a case or file a quiet title lawsuit which could take months and thousands of dollars to resolve.
3. One party won't sign. Two things you can do: 1) Seek contempt proceedings, or 2) Court may direct the act be done at the cost of the disobedient party by some other person appointed by the Court and the act when so done has effect as if done by the disobedient party. (Rule 70 motion).
4. One party disappeared. You can't find the person so you can't deal with contempt. Only recourse is quiet title lawsuit or Rule 70 type of motion.
TAKE CARE OF THE DEED AS SOON AS POSSIBLE! Nobody needs the potential headaches.
What is a Real Estate Divorce Specialist? Real Estate Divorce Specialists are real estate professionals specializing in divorcing clients. They are trained in the legal and tax aspects of the divorce process as it relates to real estate. They learn obscure legal rulings, regulations, and tax implications. This specific training allows them to help their divorcing clients take advantage of tax laws that are specific to selling a house in divorce.
There are over 1 million divorces in the U.S. each year. In over 70% of those cases, the parties involved are either buying a house, or selling a house, or both. These clients need real estate professionals with expertise in divorce. A real estate professional who understands the special problems and laws that govern the dissolution of a marriage can be a great asset at a very difficult time.
"Divorcing couples are going through one of the most stressful times in their lives and they need all the help they can get," April DeNio says. "They are looking for a professional who not only empathizes with what they're going through, but who understands the tax and legal implications of dividing real estate in a divorce. As a Certified Real Estate Divorce Specialist, I can provide information and resources that most other real estate professionals, and even some divorce attorneys, don't know."
Unfortunately, couples will continue to get divorced and will need sound advice on the real estate issues within the divorce. A real estate professional specializing in divorcing clients can streamline the process and be beneficial to all parties involved.
Please contact me for more information or assistance.
Broker/Owner of IBEX Realty Group
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