Guiding a client through a divorce is a careful balance of legal acumen and emotional support for your clients. After the most important issues – protective orders and child custody – real estate is the most significant asset and complicated dispute.
Navigating equitable distribution laws can be complex. Save time and money by following this checklist to ensure you don’t miss important red flags on behalf of your client. If you are looking for more efficiency in your practice, partner with a Certified Divorce Real Estate Expert. The right neutral third party will use their unique training and expertise to help you and your clients ensure maximum value and expedite the tedious real estate process.
1. Make a property inventory.
First, determine how many properties do the parties own. You’ll need to include both the primary residence, rental properties, and empty lots. Real estate is generally the largest (and emotionally charged) asset that will need to be divided in the case of divorce.
2. Document the short-term plan for the primary residence.
During the separation period, discuss who will reside in the marital home and for how long. Consider who will continue to pay the mortgage and the utility bills. Confirm that the responsible party has a reliable income to cover these costs. Passions run high during a divorce, so protect your client’s long-term financial health by avoiding bankruptcy, foreclosure, or significant loss of property value because of unpaid bills or a lack of adequate property maintenance.
3. Spot the red flags in home documents. Get a copy of the title and mortgage payoff statements as soon as possible. Look for red flags, including an unreasonable loan-to-value equity, liens on the property, if the borrower has been added to the title within the past 12 months, forbearance agreements in the case of financial hardship, or notices of foreclosure. Working with a Certified Divorce Real Estate Expert will help you to spot these and other red flags to avoid costly errors. It’s also important to review the stability of your client’s income, their current and future debt load, and their credit score when making decisions about if the parties will need to sell the marital home.
4. Rental property checklist.
If your clients own rental properties, you’ll need to understand the lease terms, current maintenance plan, and what to do about ongoing rental income. Establish a short-term plan for who will continue to pay the mortgage and other bills on these properties, who will be responsible for emergency repairs, and how to communicate with lessees. Then discuss long-term options with your client including the tax implications associated with a sale of these properties.
5. Get an accurate property valuation.
Do not use Zillow or other online sources as you put together your client’s balance sheet. It is not uncommon to see a property off value of 30-50 thousand dollars which will add weeks or months to your negotiations. Instead, determined property value using an appraiser, real estate agent, or Automated Valuation Model (“AVM”) to make sure that there you are giving your client a realistic picture of their finance future and a fair division of equity.
6. Ensure that your clients are current on their mortgage payments.
While cases of foreclosure are rare, the odds go up significantly during divorce. Keep in mind that lenders are more likely to close if the home equity is high. Whether one of the parties has stopped paying the mortgage because of financial obstacles or simply out of spite, it’s important to act right away to protect your client’s future credit.
7. Stay current on the changing real estate market.
Work with a real estate agent with expertise in divorce to understand how changes in market inventory and the fluidity of home values will affect your clients and your practice. Rising interest rates and a rapidly shifting demand may change the options available to your clients.
8. Think like a lender.
As an attorney, your first priority is your client’s well-being. However, it’s important to understand how different factors may affect their ability to pay their legal fees. Do your due diligence to review your own risk considering the mortgage payoff statements, current cash flow, and timeline for payments. Be wary of clients who are behind on their mortgages or have a negative credit history.
9. Find the right team of experts.
As a family law expert, you are juggling the demands of many clients with complicated legal issues. Work with a certified divorce real estate expert who does the behind-the-scenes research to ensure accurate and timely results for your clients. Look for a firm trained specifically for divorce real estate dispute resolution, has a systematic process for attorney contact, and can coordinate between attorneys, courts, and order-enforcing entities. For complex cases, a certified divorce real estate expert can also testify and provide court documentation with the proper foundation and credible testimony. Partner with firms whose expertise will prepare you more and help you resolve cases more quickly.
For your clients, divorce is often the most disruptive, emotional, and costly experience of their lives. Guiding them through the division of their real estate can provide peace of mind and a financial future.
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Breann Green is a Certified Divorce Real Estate Expert, specializing as a neutral third party selling homes in the most difficult situations, in addition to traditional real estate transactions. After going through her own divorce in 2015, she was inspired to help others and has over 16 years of experience and 1,000 hours of training. Breann assists family law attorneys in having the proper resources to expedite listings and sales to ensure maximum value. Breann’s expertise will help family law attorneys save time and money for their clients.