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What every real estate professional should know when representing vendors who are divorcing

By | - February 16, 2016

Steve Benmor is a recognized divorce lawyer, family mediator, arbitrator, speaker, writer and educator. Mr. Benmor has worked as lead counsel in many divorce trials, held many leadership positions in the legal community and has been regularly interviewed on television, radio and in newspapers as an expert in Family Law.

If you think that helping a newlywed couple buy a home is emotional, real estate professionals experience double the emotional energy when selling a home due to divorce. In this situation, the professional becomes more of a mediator and therapist than strictly a real estate expert. When the home’s vendors are divorcing, the real estate professional must have a firm understanding of the personal, financial and legal considerations at play. The following 6 tips should be considered when representing divorcing owners:

1. Ontario law requires both spouses to consent to the sale of a matrimonial home. This applies irrespective of whether ownership is registered to one or both spouses’ names. One of the very first questions that every real estate professional must ask is whether the property is a matrimonial home and if both spouses consent to its sale. The status of the owners’ marriage is very important for the management of the listing through to its sale and closing.

2. When the vendors are divorcing, the signing of a listing agreement may be challenging. One of the reasons why spouses separate is because of a lack of trust and an inability to resolve their differences. This may also play out in the process leading to the selection of a real estate agent, the decision to accept an offer and other particulars of sale. It is at this early stage in the process that the real estate professional will need to use her strongest negotiation skills in speaking with the spouses, sometimes separately, to establish a trusting relationship and open communication. It may be that the vendors are not on speaking terms or may be prohibited from communicating – leaving the professional as the go-between.

3. With the pending divorce, many personal factors can impact the vendors’ response to an offer. Uncertainties associated with custody of the children, moving to different homes and financial insecurity will cloud the offer process. The professional must be prepared to carefully address and manage the most minute details such as a closing date, inspections, pre-closing visits, inclusion of chattels and the removal of home contents.  This may involve separate calls and meetings and therefore double the work. The spouses may lay blame on each other for complicating the sale and jeopardizing the deal. Professionals need to be ready to manage the clients. Emergency litigation may occur.

4. Staging a home has become a key factor leading to the maximization of the sale price and the speed of sale. How a home presents may result in multiple offers. In most cases, there are costs to be incurred to paint, repair or upgrade a home. Divorcing spouses may not agree on what needs to be done or who should pay for it. In some cases, the agent may need to work with the spouses’ real estate and family law lawyers to agree on this.  Moreover, the way to deal with an uncooperative occupying spouse may be an order granting one spouse exclusive possession of the home. This too may require swift litigation.

5. In some cases, the listing and sale of a home is governed by a separation agreement or a court order. It behooves the professionals to be aware of any restrictions or conditions placed on the sale of the home. Communicating with the spouses’ family law lawyers can ensure a smooth sale process.

6. Lastly, real estate professionals need to keep and store a written record of all communications with the vendors for later reference in order to protect one-self. If possible, communicate using email. After telephone calls or meetings, confirm the instructions and agreements by email. No professional wants to face a disciplinary complaint or be the defendant in a civil action. The best way to prevent this is by journaling all such communication and actions taken.

For most families, the value of their matrimonial home is their greatest family asset. When distrust is so pronounced, the real estate professional can play a critical role as the neutral, objective and joint trusted advisor. Professionals need to be particularly sensitive to which spouse is occupying the home and which spouse has already vacated the home. From selecting an agent and lawyer, to agreeing to the sale price, to staging, showings and open houses, real estate professionals need to build a strong rapport with both spouses. With the numbers of couples divorcing hovering around 50%, the sale of a family home due to family breakdown is high. Thus, all real estate professionals need to be informed and proactive in their professional and ethical obligations.