Unveiling the Hidden Challenges of Non-Titled Spouses in Real Estate
In many situations, it is not uncommon for only one party to be listed as the owner of a house, whether they purchased it before marriage or deeded it during a refinance. This can create significant challenges in a divorce case. While the non-titled spouse may have a stake in the property's equity, they are not considered a legal owner and therefore not involved in the listing or purchase agreements. Legally, one cannot sell something they do not own.
Real estate contracts, by their nature, establish contractual relationships solely with the titled owner(s). Realtors are bound by these contracts and have obligations only to the titled owner(s). Similarly, title companies recognize and owe duties to the person listed on the title. All entities involved in a real estate transaction operate on the basis of titled owners.
What this means practically for a non-titled spouse in a divorce case:
Non-titled spouse in a divorce case has no authority over crucial aspects of the listing and sale process.
They cannot influence the list price, price reductions, choice of a brokerage, listing duration, commission, marketing strategies, open houses, lockbox, or even the sign in the front yard.
They also have no say in offers, counteroffers, repairs, escrow duration, buyer's closing costs, or the choice of the buyer.
Realtors are not obligated to take instructions from the non-titled spouse or communicate transaction details to them or their attorney.
Essentially, their role in the listing and sale transaction is akin to that of a tenant.
One of the most challenging dilemmas for the non-titled party is their lack of control over the distribution of proceeds from the sale. It's important to note that a lis pendens, which is a notice of pending litigation, does not restore authority to the non-titled spouse. It simply serves as a red flag to the closing officer that it must be released. By the time a lis pendens is addressed, the contractual terms related to the real estate transaction have typically been agreed upon.
These are just a few of the issues that arise when only one party is listed on the title. If you represent a party in such a situation and the house is to be sold, it may be advisable to appoint a Certified Divorce Real Estate Expert (CDRE™) and include provisions in the agreement stating that the CDRE will communicate equally with both parties. In the event of a disagreement, the CDRE should notify counsel before executing any documents.
If you have a situation or case involving real property concerns or need assistance with listing a property, please don't hesitate to contact me. You can reach me at the provided number or send an email, and I'll be more than happy to assist you.