In a Divorce Can I Short Sale My House To My Spouse?

Real Estate Agent with Keller Williams Realty Louisville East (502) 664-7827

In a divorce situation there are often contradictory needs that cannot be fulfilled at the same time.

One spouse wants to remain in the house, especially to preserve the children’s habitual residence. However, the new financial situation may render the monthly mortgage payment unaffordable and there may be more owed than the house is worth.

A short sale is viable way to sell the house and get rid of the mortgage. The lender lets the house sell for market value, even if it generates an amount SHORT of the payoff.

This sometimes leads to the question:

Can one spouse short sale the house to the other spouse?

The answer is a definite NO.

The short sale lender does not allow the house to be sold via a short sale to a family member.


  • The short sale lender does not allow the house to be sold to anyone who will let the short selling seller stay in house after the sale.
  • The short selling seller is not allowed to rent the house from the new buyer.
  • The new buyer is not allowed to sell the house back to the person who sold it via a short sale.

The Short Sale Lender Typically Has The Buyer and Seller Sign an “Affidavit of Arms Length Transaction”

This affidavit will spell out these special restrictions.

When a divorce involves an “upside down” mortgage, it is vital that the divorce attorneys be well versed in short sales.  Divorce attorneys cannot be experts in everything, so they often consult with a Realtor who specializes in short sales. Some real estate lawyers also are familiar with the intricacies of the short sale process.

In Louisville, call Dave Halpern, Real Estate Broker, Louisville Short Sale Expert Realtors. Dave has helped many sellers short sell their house in divorce situations.




Posted by



Dave Halpern, Realtor

The Dave Halpern Real Estate Group

Keller Williams Realty Louisville East


(502) 664-7827



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Comments (2)

Wallace S. Gibson, CPM
Gibson Management Group, Ltd. - Charlottesville, VA

I just rented a townhouse to a man whose wife and her attorney/brother think they can do just this - buy the property from the bank in a short sale or at auction.  This scenario is not playing out well with their family court judge overseeing their divorce and custody arrangement!

May 09, 2011 11:12 PM
Randy Ostrander
Lake and Lodge Realty LLC - Big Rapids, MI
Real Estate Broker, Serving Big Rapids and West Central MI

I would think if it were allowed it would open the door to all sorts of scenarios that could be borderline fraud.

May 09, 2011 11:26 PM

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