According to LawFirms.com, January is referred to as “the divorce month,” with filings spiking during the post-holiday season.  While this may not be the most positive way for me to start out with tips this year that you should be aware of and prepare for a conversation (or two).

The largest asset to be considered in a divorce process can be and usually is the family home held by the marital community.

Any time a seller is involved in a pending action in Superior Court, it causes extra scrutiny on from the title insurance company.  Divorce is no exception.

When the house is sold after the divorce is final, the title and escrow companies are able to follow the instructions for allocation of proceeds identified in the final decree, filed in Superior Court.

Sometimes the sellers can’t wait until the final decree is in place and need to sell and close prior to the divorce being final.  The simplest way to avoid issues is to have both parties sign the Warranty Deed at closing.  Title passed without dispute to the buyer, escrow is instructed how to distribute funds to the sellers and everyone moves forward.

If one party is being asked to Quit Claim the property to the other prior to the final decree being entered, title will consider the following:

1. Do the parties have children?  It is more likely that a Judge will overrule any settlement agreement that is not equitable for the children.
2. Do they parties have Attorney representation?  The title company might not want to insure in a situation where they feel one party does not have a proper understanding of their rights in the divorce process, or if one party is refusing to participate.
3. Is it an amicable divorce?  If it is clear that there is conflict between the parties then we have to be especially careful to eliminate any risk that the property may be pulled into further litigation after closing.
4. Have the parties reached some form of settlement agreement regarding the property?  It is difficult to insure when the parties don’t have a clear idea about what they are getting and giving up in a transaction.  Their feelings about the sale of the property may change before the divorce is final.

Both parties may have agreed in writing to the distribution of property, however a Superior Court Judge has far-reaching authority, including the power to set aside an agreement between parties if the Judge determines the distribution is unfair.

Working with clients in the process of a divorce often presents challenges.  Armed with appropriate information, you can help them navigate the process and help create as smooth a transaction as possible.

Source:  Claudia Ollestad, Chicago Title & Escrow