What Happens if the House is Sold During the Divorce?

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It is the unfortunate case that, in many divorces, the marital home is sold as part of the divorce proceedings. Sometimes, the decision is made for non-financial issues - the house is tied to too many memories and both parties decide that they are better off starting anew. More often than not, however, the financial circumstances are such that the house is simply unaffordable. Perhaps the party who wants to stay will no longer be able to afford the carrying costs; an unfortunate corollary of most divorces is that oftentimes one income or even two are insufficient to maintain two different households. Whatever the reason, often by agreement and sometimes by court order, the marital home is just ordered to be sold either during or after the divorce.

But what happens when you have two people who are in the middle of the divorce process and now have to unite in a common enterprise to sell the house? What happens if a person knows that the house needs to be sold but may drag his or her feet in the process for his or her own reasons? How do you make sure that people are on the same page during what can be a contentious period of time?

Questions like this illustrate the importance of having comprehensive agreements regarding the parameters for the sale of the house. For instance, the agreement may speak to who the broker is, or how a broker is selected. It should direct the parties to ensure that broker communicates simultaneously with both of them. It should address how to determine the listing price. It should determine how to resolve questions of whether to reduce the listing price. It should speak to what constitutes an offer that must be accepted - although parties are incentivized to maximize the value of the house, one party may have more urgency to sell the house. For that reason, oftentimes it is mandated that offers within certain percentage points of the listing price need to be accepted. The agreement should specify that the house is to be kept in a neat condition and made available for showings and open houses. It should specify how repairs and maintenance are to be agreed upon and paid and who covers the carrying costs pending the sale. Depending on the circumstances, other clauses may be needed. The parties may even agree to an arbitrator to resolve disputes about the sale of the house so they do not have to resort to court and its expense and protracted timeline.

In short, the sale of a house is a major transaction with a lot of moving parts. In the context of a divorce, each of those moving parts is something that has the potential for conflict. To that end, once there is a decision to sell a house as part of the divorce process, parties would be well advised to establish the mechanics for the sale process to ensure for a smoother transaction for all involved, and to put themselves in a good position to get maximum value from the sale.

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