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The 3 D’s will almost always delay a closing if they are discovered late in the game.
DEATH
- If the property is held by someone who has passed away there are steps that must be taken to sell the property.
- If the property is held as “Joint Tenant’s with the Right of Survivorship” (aka JTWROS) then the party that is still alive will be able to transfer the title with just a copy of the Death Certificate.
- If the property is held as “Tenants in Common” (aka TIC) the estate must be handled before the other party can transfer title.
- If the deed does not say whether something is JTWROS or TIC then the title is TIC and the estate must be handled.
- It takes a minimum of 30 days to probate an estate, but it typically takes much longer than that.
DIVORCE
If a couple selling a home is splitting up then it is important to know the status of the divorce.
If the divorce has been filed with the court but is still in process: Depending on the progress in the case, either the court will need to approve the sale or the divorce attorneys will need to approve the sale in writing.
If the divorce has not been filed yet: The sellers can sell the house normally, however, sometimes they do not want to attend closing together. Explain the situation to the closing attorney so that they can make the necessary accommodations. Most attorneys will split up the closing for a fee.
If the divorce has been finalized: The closing attorney will need a copy of the final decree and/or the filed and approved Settlement Agreement addressing the disposition of the home. Sometimes, the Settlement Agreement will state that one party is entitled to the house, but does not take the extra step to say that the Agreement shall serve as a transfer of title. In that case, we need a quit claim deed from the non-selling spouse in order to transfer title. This is frequently very difficult to obtain.
DISTRESS
If the Seller is in financial distress and has not been paying the mortgage then it can be very difficult to get a payoff on the loan. It frequently takes a week or more to get the lender to provide a payoff. After a loan has gone into default, it may be transferred to the lender’s “Workout Department”. With so many sellers in distress situations these days, those departments are overwhelmed and difficult to get in touch with.
Another common problem with sellers in distress is that there can be numerous liens against the property. These too take time to get payoffs.
The way to overcome all of these issues is to speak frankly with your clients and get a title search done early to discover the problems before they delay a closing. Point out to the closing attorney the concerns that you have when you send them the contract so that they can look out for potential issues as well.
Thank you to McManamy | McLeod | Heller, LLC for this valuable information on the 3 D’s.
