Short Sale and Divorce – what you need to know by Christian M Lapham

Even in intact marriages, selling real estate can be a stressful process.  As one would imagine, dealing with the sale of real estate in a separation or divorce context can be particularly difficult, given the additional legal and emotional challenges.  Fortunately, there are a number of valuable suggestions which can significantly reduce the cost and frustration of selling one’s home during a divorce.

As in all issues in separation and divorce, you have two options for how to resolve the sale of your home.  The preferable option is for you and your spouse to execute a formal agreement outlining the sales procedure as well as the allocation of equity (or debt) in a Separation and Property Settlement Agreement.  This is a private document between the parties which, if done correctly, will resolve everything in your separation and divorce process, and many things permanently so.  A good Separation Agreement will outline the sales procedure, including how the Realtor will be chosen, how price changes will be made, the parties’ obligations to maintain the home in “list condition” (this is a big one), and how the positive equity or debt will be allocated.  Virginia is what is called an “equitable distribution” state, and the governing statute allows the Court to allocate assets and debt to the parties.  In this vein, a good Agreement can save the parties headaches and legal fees down the road.

A second option for parties to a Separation Agreement is to consider a spousal buyout, which is a procedure whereby one party refinances the current mortgage(s), pays the other party an agreed upon price, and in exchange the other party executes a deed conveying his or interest in the home to the first party.  Like the sale, a spousal buyout should be carefully orchestrated in the Agreement, and should answer the following questions:  1) how long does the “purchasing” party have to conduct the spousal buyout?  2) how will the buyout price be decided?  3) when is the “purchased” party receiving their funds, and will it be lump sum or over time?  4) when is the deed executed?  A good Agreement will address all of these questions, and more.  For example, who will receive the refund of the escrow account upon refinance?  When will the payment of the home-related expenses specifically change over?  All of these should be addressed up front.

The second option is for the court to decide how the asset or debt is to be allocated.  This can be very expensive, and sadly, in some cases people spend all of their equity fighting over the sales proceeds in court.  Much like other issues, balanced judgment and good counsel from the attorney in this respect can help individuals avoid a very expensive mess.  Furthermore, judges will not micro-manage the sales process to the same extent that attorney can in the contractual context, so the costs of enforcing an order of the court in this vein can be even greater.  However, litigation is sometimes unavoidable, and if you have to look to the courts to resolve these issues, you want to be prepared.  In advance of court, take a peek at the equitable distribution statute in Virginia by googling Virginia Code 20-107.3.  Although the statute is complicated (there is a continuing legal education seminar on this statute alone which has been taught by the Chief Judge in Fairfax to practicing attorneys) this can get at least get you started on understanding this process.

Most importantly, an excellent Realtor who is adept at handling different personalities and can serve as a go-between during this difficult process is invaluable, and as important as the attorney.  Rob Chevez is just such a Realtor, and I would not hesitate to recommend him in this context.

 

Christian M. Lapham

2300 Wilson Blvd., 7th Floor

Arlington, VA 22201

703.525.4000 main │ 703.525.2207 fax

clapham@beankinney.com │ vcard │ bio

 

What Are the Best Characteristics For a Short Sale Negotiator?

In the state of Virginia the way that we do it is you want to contact the Realtor that has experience in doing a short sale. You want a Realtor that has closed a number of transactions in the past because it is a lengthy process. It’s not complicated, but it’s lengthy and there are lots of little steps that have to be followed properly. You can go online and you can find certain agents that have certifications. There are lots of different certifications out there that show that they have at least had some form of training within the world of short sales.

The next question that you would want to ask is how many short sales have you actually completed and can you show me proof with approval letters? These will show that they have actually gotten these short sales approved.

Also in the state of Virginia, agents shouldn’t be negotiating. I know a lot of agent still do, but they shouldn’t be negotiating their own short sales. They should have somebody on their team that actually negotiates the short sales for them because it is something that takes an incredibly long amount of time during the course of the day and a good short sale agent doesn’t have the ability to do both. They have to either help guide their client, sell that property, and find buyers for the property or they have to negotiate their short sales. They can’t do one or the other effectively.

You can find them online or you can also go into the MLS and see who is doing a lot of short sales.