Unapproved community property sale in divorce

July 14, 2016 2:39 PM

I am going through a divorce. I am in California. My ex has put our jointly owned home up for sale without notifying me -- contrary to the state's "automatic temporary restraining order" against sale or transfer of property before final judgment. The house is now under contract. I have a lawyer and am not asking for legal advice. This is a question about how the real estate process works.

My ex has long told me that I quit-claimed on the house we lived in when we signed the closing papers. I believed it all along, because I am an idiot. (Ex is the only one on the loan because at the time I had no credit. And while ex claimed sole ownership, ex was perfectly happy to allow me to pay for half the mortgage and other expenses the entire time we were there. Go figure.)

We have filed for divorce and we were near the point of reaching a settlement. We have both moved out of the house into separate places. Last week, my lawyer sent me the settlement papers but also informed me that that my ex had listed the house (for $100k more than we paid for it), and that I was possibly entitled to half the equity. I told my lawyer I'd signed away rights to the house. My lawyer said "Uh, let me be the judge of that."

Turns out that I did not sign anything away and I am listed on the deed with no transmutation. Lawyer confirms I'm entitled to 50% of the proceeds. Huh.

Anyway, I've been watching the real estate listing since learning that the house was on the market. Today I couldn't find it on the realtor's website, so I called and asked if it was still available. Nope, the realtor said, it's under contract.

My ex does not know that *I* know the home has been listed, or that it has been listed at such a high (to me) price. My ex does not know (or maybe does know but hopes that no one notices) that I did not quit claim and am entitled to half the equity. My ex has chosen not to retain a lawyer, because my ex is cheap and has been happy letting my lawyer do all the paperwork.

So, what happens next with the home sale? Legally, it cannot be sold without my signature (which apparently neither the ex nor the realtor realize right now.) [*Note: This is the same realtor who sold us the home, and she likely took my ex's word when the ex told her I'd signed over my interest.] Who is going to discover that I am a co-owner? Is it the realtor? Will it happen when they go to the title company to transfer ownership? Will the county halt the sale after the parties try to make the ownership transfer? Will someone encourage my ex to contact me and say "Oh, hey, you don't have any interest in the house at all but I need you to sign this paper, please and thanks"? I am ignorant enough about the home-buying process, even having been through it, to not understand what the next steps are.

Again, not asking for legal advice, because I know my attorney has my back. I'm just wondering how this would play out if/as the boulder to continues rolling down the hill, or if I didn't have an attorney.

posted by anonymous to Work & Money (16 answers total)

My mom is a real estate paralegal. All I know is what I've overheard from her (i.e., not much), but the title company should find your interest when they look at the deed. Alas, I can't be any more specific than that.
posted by kevinbelt at 2:43 PM on July 14, 2016

So, what happens next with the home sale? Legally, it cannot be sold without my signature (which apparently neither the ex nor the realtor realize right now.)

Depending on the state, either the Real Estate Lawyer or the Title company will begin doing their due diligence and find the title issue quite quickly, whereupon your ex will be notified that he should be ready to have you come in and sign.

I don't know if "someone" will encourage your husband, but since the sale can't move forward without your consent, that will be sufficient motivation. Whether you had an attorney in this process wouldn't really change that part of the process.

The difference is that in this case you can direct your attorney to negotiate the settlement to ensure that you get your fair share in order to allow the sale to go through. If a settlement isn't reached, you don't sign, and the deal falls through. This will likely start happening quickly over the next two-three weeks. Don't sign anything without talking to your attorney.
posted by Karaage at 2:43 PM on July 14, 2016

I have no idea what the negotiations are on the rest of your marital assets is, but if I were your husband, and this was news to me, it would change the rest of the terms of the agreement. I happen to think that you are the one with the leverage here. The longer he waits, the more leverage you have because he will not want to lose the sale of the house.

As for the process in the sale of the house, no title company and thus not the closing attorney for either side will let this sale go through without your signature. At what time that becomes apparent to your ex, it is hard to say. It might be known now and he chooses to not say anything until the last minute. He may be planning on using it as a lever in the rest of your negotiations or he may just be ignorant and about to have the shock of the year.
posted by AugustWest at 3:18 PM on July 14, 2016

Try to ensure that no forged quit-claim has been filed with your signature on it. I would be a fairly simple records check.

If the realtor involved were to get a call about the facts in this situation, that would create quite a fuss, I suppose. They will not get their commission, and will get a nasty push-back, if an otherwise done deal was killed at the closing.
posted by Midnight Skulker at 3:31 PM on July 14, 2016

Yes you probably want to make sure before the sale goes thru that your interest is known to the realtor and whoever is doing the closing just to be sure no forged doc is produced that would allow the sale to go forward without your involvement. Perhaps go ahead with some contact now?
posted by Cocodrillo at 4:03 PM on July 14, 2016

Being proactive in this situation would be the best way to protect your interests and you've already retained legal counsel to do that, so make sure you ask them to do so. Accidents happen, people sometimes cut corners. It's possible your rights could be overlooked (or downright covered up as some have suggested.)
posted by Apoch at 4:34 PM on July 14, 2016

Not your lawyer, and not a lawyer at all. BUT! Just bought a house, so here is my two cents.

Where I live, my understanding is that the purpose of the Title check (and title insurance) is to make sure the person selling the house is the owner. If your name is on the title, then good news for you! Areas where I would be concerned would be someone forging your signature on the sale or on another document.

Ask your lawyer, but in your situation I would probably want to call the real estate agent and nicely say, "Hey, this house I co-own is on the market and I was never told. I want to let you know this is a problem. Here is my lawyers contact information." And let the lawyer negotiate from there.

Is it possible your ex told the real estate agent that you know about the sale and he is in charge of dealing with it?
posted by Toddles at 5:16 PM on July 14, 2016

Yes, the title check SHOULD show you as co-owner, but it's worth being safe rather than sorry: can your lawyer write a letter to the real estate agent, telling them that you are the legal co-owner and your signature is required for any sale?
posted by easily confused at 5:28 PM on July 14, 2016

If you could come up with a pretty good ballpark figure of the amount you paid in mortgage, repairs and upkeep, I think that would help you and your attorney to value your share. Also, if you paid any of the down payment. Fwiw, my ex was not on the mortgage docs but was on the title of our cabin and she was (deservedly so) still entitled to half when we sold it after the divorce. My point is, do not feel in any way guilty or bad about claiming what is rightfully yours. Have your lawyer square it away, it is why you are paying her. The fact that he has no lawyer is his decision and he should reap the consequences. It sounds like his decision to save legal fees is going to cost him.

My other $0.02 worth of unsolicited advice is to take some small amount of what you get from the house and spend it on getting educated about finances. I actually paid for my ex, as part of the divorce settlement, to learn how to budget, manage her money, understand the basics of various common investments, etc. She never had to or wanted to learn it when we were married (and before), but it is a very expensive way to learn it by trial and error.

(Also, not sure if there are any tax implications regarding the sale of the house (does not sound like it meets the IRS requirements) but if there are any back taxes owed discuss with your attorney an innocent spouse filing that may shift 100% of the burden to him.)
posted by AugustWest at 5:46 PM on July 14, 2016

I know people who work in title, and one thing I've managed to glean is that yes, it is their job to ensure that a title is clear before letting a sale go through, but as with any other job, people get lazy, sometimes they make mistakes, and sometimes they do intentionally sketchy things.*

So it's probably in your best interests to let someone involved in the process know that you have an interest in the house. Your lawyer should probably do this if possible.

The longer this goes on, the harder it's going to be to fix, and while it might be tempting to let your sneaky ex waste their time, nobody else involved is doing anything wrong. And it might even have some potential to come back to bite you.

* Sorry for the substantial edit, but I need to clarify that my friends are not the ones doing sketchy things. I've just heard them talk about news stories and stuff about sketchiness.
posted by ernielundquist at 6:06 PM on July 14, 2016

If you could come up with a pretty good ballpark figure of the amount you paid in mortgage, repairs and upkeep, I think that would help you and your attorney to value your share.

I'm not an expert by any means but if the house was bought during the marriage its community property and split 50/50 by CA law regardless of how much money was put into it by either spouse.
posted by bitdamaged at 7:40 PM on July 14, 2016

In a similar situation with a commercial building, I kept my mouth shut until the building was sold and collected my half afterwards. I only gloated inwardly.

If I'd made a fuss, she might not of sold the building. You seem to be in an even better position if your name is not on the loan and just on the deed. Looks pretty good for you. Smirk and treat yourself to something.
posted by Mr. Yuck at 8:56 PM on July 14, 2016

I'm in California and have had various interspousal transfers done before and since my separation, starting first with my now-ex-spouse quitclaiming when I bought my home because she didn't have credit, then her quitclaiming again on my house after I bought her share out, then me quitclaiming on her first and second houses after our separation. It was all on the level.

If you weren't on the loan docs, then the loan company would almost always require you to quitclaim the house, which is known in your case in CA as an interspousal transfer deed, which is what my ex-wife had to sign. On initial sale, the title company at the behest of the loan company has the deed drawn up as "Mr Anonymous, a Married Man, as his separate property." Then you Mrs. Anonymous, as part of the closing docs, sign an interspousal transfer deed that is basically a quitclaim deed, except for the purposes of taxes. This didn't happen for me when she sold her house since her deed was perfect. Only when she bought. When she sold, I didn't have to sign anything.

HOWEVER, I was told EVEN BY MY OWN LAWYER that she had an interest in the equity in the house when we divorced, even though the deed was in my name as my separate property, even though she effectively quitclaimed it and was not on the deed. I cut her a check for close to $50k for a home we had owned less than 2 years.
posted by Llamadogdad at 11:14 PM on July 14, 2016

The only piece I'd add is that your attorney may arrange for you to sign the quitclaim deed and put it in escrow with the title company. They will keep it and will not record it until the settlement statement has been agreed to and you are assured of getting your portion of the proceeds. That was you don't need to go to the closing or hope that your husband sends you they money after the closing - you can get it directly from the title company who is handling the closing.
posted by Sukey Says at 1:00 AM on July 15, 2016

I think you need to be 100% certain he didn't forge your signature anywhere.
posted by yes I said yes I will Yes at 4:33 AM on July 15, 2016

From Google: "California law defines community property as any asset acquired or income earned by a married person while living with a spouse."
Whether you formally hold title to the house or not, you are (almost certainly, I'm not a CA lawyer) damn well entitled to half the proceeds of the sale, by law. The title question is a red herring here.
In your shoes I would enthusiastically be paying my lawyer to urgently get into the fray and ensure no shenannigans could possibly result in my ex getting a big check and then running off with it. This is hundreds of thousands of dollars at stake, to which you are also morally entitled as an investor in the home - you need to invest a few hundred to ensure you are not ripped off because you assumed the system would work in your favor unsupervised.
posted by BigLankyBastard at 10:26 AM on July 15, 2016