(A guest post from the Ilumni Institute)
Attention Divorce Attorneys,
Don’t forget to include proceeds division and distribution directives in sale-of-house orders!
In addition to enforceability and protecting your clients' interests, here are a few of the issues divorce REALTORS® see when there are no orders or agreement regarding proceeds:
Without an order or agreement, the closing process can evade busy counsel, and without a close eye on these timelines, the parties may instruct the closing officer to distribute funds directly to their accounts, bypassing attorney trust accounts or other joint debts being paid.
Perhaps the most alarming scenario is when only one party is on title. The titled party is the principal in the real estate transaction. Title officers and brokers can be bound by fiduciary duties and real estate industry governance to obey the principal and distribute funds pursuant to their instructions (aka, their own bank account). They may slice out the other party altogether—even with a court order to the contrary!
It's also worth noting that title frequently cannot (or will not) hold funds after closing. They are governed by oversight and have compliance issues when funds are held for any length of time. A family law dispute over proceeds distribution isn't looked at favorably.
Appointing a CDRE as the listing agent on a case is an effective way to ensure orders match distribution instructions, but that duty must be outlined clearly in an order, since a typical REALTOR’S® role does not extend that far.
When you are appointed on a case, for example, be sure to obtain a copy of the court order and inquire about proceeds distribution on day one. If there is no agreement, seek clarification from the parties and counsel until there is one—and work closely with your closing officer to ensure there are no discrepancies between the order and the instructions.
Feel free to reach out if you have any questions about proceeds distribution or anything else related to the real estate aspect of your cases.
Shannon Rose
CDRE, SRES, CDPE, CLHMS, GPS
DRE# 01422955
Los Gatos, CA
1-650-550-8646
DivorceRealtor@RoseGroupRE.com
SHANNON ROSE/ROSE GROUP
DRE #01422955
KW BAY AREA ESTATE
DRE #01526679
16780 LARK AVE.
LOS GATOS, CA 95032