Death, Divorce and Bankruptcy and the Listing Agent
Many times sellers don't know they should explain all details about the status of the title and the history of modifications when they want to list their home for sale.
This is a very nice written article about what agents need to know in these three cases. Listing a home for sale might look simple enough, but a lot of details need to be researched including the lack of permits. Please check your seller has had permits when doing additions and modifications to their home. It can be a sticky situation if it's not resolved.
Check with your local authoriies for infractions and your title company for legal ownership.
As the listing agent, if you are on a listing appointment and anyone uses the words "death", "divorce" or "bankruptcy", even casually, you want to be certain to get a title run very early in the listing process. Lots of times people don't understand legal ownership well enough to be able to explain their situation to you. They may drag out a dusty file of crumbling papers that may or may not make sense to you. Even if they make sense, those may not be the right papers.
So, ask the title company to figure out the status of the title. After you turn in the listing file to your office, email your favorite title escrow officer and ask them to do a title run for you. The time to find out about title problems is early, early, early in the listing process. That way, if there are any problems to be cleaned up, they can be cleaned up without the pressure of contract deadlines. Way better. Much less painful.
With both death and divorce, you as the listing agent need to know who has the legal right to sign the listing agreement. I have been in the position of having a listing agreement signed by the person living in the house only to find out that someone else has legal title. In that case, not only did the owner of record not agree to the listing, they didn't want the house sold. Period. Absolutely nothing in that situation was as it appeared on the surface. I got to tiptoe out quietly and run away fast. And, I got to eat my early marketing costs. So, you want to know who has legal title.
Death of the property owner complicates real estate titles. It is common for family members to not understand the details that need to be taken care of when someone has died. Entire courses in law school are taught on just how many ways death can mess up legal titles to real estate. We don't have the time or taste to go into all that here. All we need to know is that the title company will tell us if there is a problem or not. They look at the courthouse records and then make a decision about what they will need to be able to insure title. If they are satisfied that all the details have been correctly sorted out, that is all that matters to me.
Divorce gets sticky because it is relatively common for the family home to be awarded to one party, but the only supporting paperwork is an incomplete reference in a divorce decree. It is relatively common for no deed to be drawn up and signed at the time of the divorce. Another common thing to have happen is that the divorce degree awards title (and the mortgage) to the house to the non-custodial parent and gives the parent with custody the right to possession for as long as the children live in the home. Did you follow that? Let me try again. Mom pays the mortgage while Dad lives in the house with the kids. Once the kids leave home, Dad's right to be in the home ends and Mom can sell the house at that point if she wishes. Again, the time to find out about this problem is as the listing is entered into MLS.
The reason you care about Bankruptcy is that there may be details out there that need to be attended, things that will take time. Bankruptcy is frequently about financially messy situations and that mess may or may not have all gotten straightened up in the bankruptcy. I recently did a short sale where I got to make 2 judgments go away before we could sell the property. There had been a bankruptcy but for one reason or another these judgments weren't included. There was also a paid-off but unreleased prior lien with a private lender. (Just about every single word in the prior sentence is a trouble-magnifier!) We had to track down that person and get a release. It wasn't hard to do. It just took time to make it happen. So, while I was sending off reams of documentation to the short-sale lender, I was working on these title issues on the side. I love my job. I really do. No one has ever suggested that this job is boring!
Why wait until you actually have the listing? It costs the title company to do that title run. Until I have a signed listing agreement, who knows if the listing is ever going to become real or not. Goofy things happen. Part of the reason the title companies I use are willing to do me favors is because I don't abuse that relationship.
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Buying or Selling in the Dallas area? Call me. Let me help. 214-228-9828
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