As a real estate professional, you are accustomed to negotiations with brokers and agents. While not always arms’ length, these negotiations are generally driven by dollars and timing, not emotions.
Representing a husband and wife during a divorce proceeding, however, may place you in the unenviable position of referee and confidante. In this instance, you cannot do your job without understanding why property is being sold, what directives the Court has issued regarding terms, and your role in the sale process. To this end, consider the following when you are involved in such a transaction:
1. Orders Requiring a Real Estate Sale – Illinois law generally does not give a divorce court authority to sell real estate until the end of a divorce case. There are limited exceptions to this rule, however. Moreover, some judges interpret the law to allow them to order the sale of a house in circumstances outside those exceptions.
Parties to a divorce may also agree during the divorce case or as part of a final settlement to sell real estate, and that agreement may be memorialized in a court order or a final judgment for dissolution of marriage. The provisions of an order or judgment issued by the court and an agreed order are equally enforceable by the court. You should obtain a copy of the relevant order or judgment to understand the terms of sale, and your involvement in the process.
2. Engaging a Real Estate Professional/Signing a Listing Agreement – A divorcing spouse may attempt to engage a real estate professional to sell property without the other spouse’s knowledge and consent. This happens when title to property is held only in the name of one spouse. Unfortunately, holding title does not give the spouse a right to sell. In Illinois, unless agreed otherwise, property is characterized as “marital” (belonging to the marital estate and both spouses) regardless of title, until the end of a case. Unless otherwise ordered or agreed to by the parties, marital property of significant value generally cannot be sold during a pending divorce case.
3. Setting the List Price and Reductions – Once engaged, the listing broker or agent can be directed by the Court to set the list price and subsequent reductions if the property does not sell within a designated period of time. This requires you as to provide an opinion of value where the sellers’ interests may not be aligned. Note that a divorce court does not have authority to order a real estate professional to act. When a court “orders” a real estate professional to set a sale price, the court is actually requiring the parties to use the real estate agent or broker’s recommended price as the list price.
Sometimes parties and counsel want to keep possible reductions out of the public record. In this instance, the parties may execute a private letter agreement or incorporate a letter agreement into an Order by reference only.
4. Showable Condition – Selling for the highest price requires a pristine home in great condition. This may mean staging, organizing and/or keeping the home neat, clean and ready for showings at any time. The court may direct divorcing parties to maintain the home in a condition to be sold at all times. This can be problematic because you and one or both of the parties may have different standards for showable condition.
Moreover, a party unmotivated to sell may impede a sale by refusing to keep the house in showable condition. It is not your job to referee in this instance. Inform the parties and their counsel of the problem, in writing, and let them hash it out. If time is of the essence, you should state that in your writing.
5. Court and Deposition Testimony – Occasionally, a real estate broker or agent will be required to appear in court to testify regarding issues such as recommended list price or cooperation of one of the parties to the sale. The only document which can compel you as a third party to testify in a civil matter in court is a subpoena. You can also be compelled to appear for deposition by a subpoena for deposition.
In those two contexts, you are not generally represented by counsel for either spouse, so consult with independent counsel, particularly if you have never had your deposition taken before. Depositions are taken under oath and penalty of perjury, so they should not be taken lightly. In addition, attorneys sometimes ask questions meant to confuse you, but knowing what to expect and how to answer questions can prevent confusion and incorrect answers. Sometimes a party (or your employer) may to object to your deposition or testimony. In this case, the issue will be addressed by the court before your deposition occurs.
6. Comparative Market Analysis – CMAs are often used by divorce attorneys as an informal and cost-effective way to determine approximate value. In the context of a divorce case, a real estate agent is generally not called upon to render an “expert” opinion of value as to parcels of real estate, and CMAs are not and should not be used in this manner.
7. Communication with Divorce Counsel – In light of the issues attendant to a sale of real estate during a divorce, you should obtain contact information for both parties’ counsel when you are involved in such a transaction. Information provided through the filter of a divorcing spouse can be incomplete or confusing. You will obtain balanced information if you contact both lawyers. To create a written record for later reference and to protect yourself, communicate using email with copies to everyone involved as much as possible.
You may need to employ a broader set of resources to complete a real estate sale during a divorce, and understanding your own rights and responsibilities in the process is integral to a peaceful and successful transaction.
Jessica Bank Interlandi is a partner with Schiller DuCanto & Fleck, the largest family law firm in the U.S. She received her Bachelor’s from Georgetown University and her Juris Doctor from Chicago-Kent College of Law. In 2010 and 2011, Jessica was named an Illinois Super Lawyers “Rising Star,” and in 2012 and 2013, she was named a “Leading Lawyer.”