Once upon a time you bought a house with that really hot girlfriend you had for three years. She turned out to be a clone of Lindsay Lohan and well, last you heard she’s in rehab at a clinic near Provo. You both qualified for the loan to buy the house, and now you want to move to eastern Tibet to get far far away from her. But you’ve got to sell your home first. You and Lindsay 2.0 are BOTH the owners listed on the title as ‘joint tenants’. Great, just great. Now you have to deal with her and get her to sign the listing and closing papers.
Joint tenancy is a way to hold title to the property when there is more than one owner. If one of the owners were to die, the property would automatically be owned by the surviving party. Divorces aren’t generally pretty for anyone. We real estate agents are used to doing transactions where the parties are either in the process of divorce or getting a divorce. IF the parties aren’t divorced yet, the two (or three, or multiple owners) MUST all sign the listing agreement, and the sales contract. Here comes the nasty part: When the property closes, all the owners must agree to how much of the profits each owner gets. If the parties are still speaking, it’s usual for the proceeds to be split 50-50.
But what if the divorce has been filed in court? The judge will determine who gets what amount of the profits once the home is sold. What if you put in all the original funds for the down payment and the new kitchen and Lindsay 2.0 didn’t provide any money during your stay in the home? Maybe the judge will let you get reimbursed those funds and will take that amount from L 2.0’s proceeds…or maybe not. You can still list and sell the home, but the money will sit at the title company after the closing unless there is a written order by the court as to how the proceeds are divvied up.
To even thicken the soup, let’s say your dad had to help the two of you buy the home and all three of you are on the deed as joint tenants. Again, if there’s not a divorce proceeding underway, the three of you can figure out who gets what percentage of the proceeds and instruct (in writing) how the money is to be split up at closing. If there is a divorce, the judge will have instructions for the title company at closing as to how to split the profits.
It’s always much easier and cheaper to agree to sell and agree on how the profits are split before a divorce is filed, if you and your partner(s) in the home are still being civil to each other. The minute a judge gets involved, the costs to sell go up because you all have to hire attorneys to get you what you want in the divorce settlement of assets. I’m not saying DON’T talk to an attorney if there’s an impending divorce. Certainly, get all the opinions you can before you sell under emotional duress.