Dishin' Dirt on Representing Clients during and after a Divorce with Sarah Bennett

Representing someone going through a divorce can be very difficult. In fact 50% of all transactions involving a person in the process of getting a divorce does not close with the first listing agent.  This podcast discusses the issues you need to recognize and strategies for handling closings in which your client is divorcing or divorced. Whether the divorce was recent or many years ago, the ex-spouse may still have ownership rights that must be handled before title can transfer.  Sarah Bennett of Better Homes & Gardens-Medley Realty joins me to delve into this topic. 

I also have an extended episode of "What Happened While You Were Out Showing" that contains important information about your educational requirements this year and "Gary's Good News Only!"

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Gary 


* Gary serves on the South Carolina Real Estate Commission as a Commissioner. The opinions expressed herein are his opinions and are not necessarily the opinions of the SC Real Estate Commission. This podcast is not to be considered legal advice. Please consult an attorney in your jurisdiction for applicable legal advice germane to your issue.

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Gary

* Gary serves on the South Carolina Real Estate Commission as a Commissioner. The opinions expressed herein are his opinions and are not necessarily the opinions of the SC Real Estate Commission. This podcast is not to be considered legal advice. Please consult an attorney in your area.

Transcript

Unknown: 0:02

This is edition dirt with Gary pickin South Carolina's only podcast dedicated to the real estate agents craft. Hey guys, welcome to another episode of edition dirt with Gary pecker and we got a really good show. Today we are going to talk with Sarah Bennett of Better Homes and garden David medleys company. We're going to talk about divorces. I know a lot of you all represent clients that are either going through a divorce have gone through a divorce, or even situations where the ex spouse is somehow still involved in the transaction, even though the divorce happened a long time ago. So we're going to handle that today. We're also having an extra long version of what happened while you were out showing. And then lastly, we are finishing up with another Gary's good news only on one issue with COVID that you need to hear about before we go on with our show. And so if you'd like to show if you please like us, subscribe to us. And please share us with other real estate agents. And also, if you like what you see here, if you want to start getting our video legal tips, you can go to our YouTube page, I'll put a link down below where you can subscribe to the YouTube page and you can see every legal tip we've ever done. And if you want to send me your information to Gary at Blair Cato calm, I'll add you to our legal tips. Now to our show, Sarah Bennett comes to us from Medley relative over at Better Homes and garden. And Sarah is a fantastic agent. I've known her for many years, her husband and I used to be law partners together and another law firm. So we are very excited to have Sarah here. She's one of the top selling agents in the Columbia market. So Sarah, how's it going? Yes. Thank you so much for having me. Well, cool. Well, why don't you start off by sharing the divorce client situation that you and I talked about the other day? Absolutely. So one thing that has kind of fallen on me I kind of fell into it is that I've started to get a lot of clients who are either going through or have just recently gotten divorced. And I have found that it has been a much more delicate situations. And I think that anyone could have prepared me for. And I think that it's also one of the things that if you have listings, you're probably going to go through this at some point as well. But, you know, for this particular situation, it's really an issue where the husband and the wife, you know, there's very much a lack of trust, and a very much lack of communication as well. And so I'm continuously left in the middle of trying to communicate to both of them without divulging anyone's confidentiality or anything like that. And it causes a lot of stress, and on all the parties that are involved. And you're absolutely right on that that representing divorce clients is probably going to be one of the hardest things you do as a real estate agent. And what the first thing I think people need to understand is that 50% of all divorce listings, fail to sale at the first real estate agent. And I think sometimes divorce couples just kind of have to feel for what they're doing. And some of them, like you said, want to play games, I don't trust each other and they dislike each other. I think one of the things that we forget is the divorce is a permanent change in our lives. So when they sell the house, here's permanent change. Number two, we've already had the permanent change of the divorce. And now we've got the permanent change of our life of selling the house and having to move. And a lot of people just don't like change. And I bet you see that just with regular clients all the time not wanting to sell house because a big change. So I think what our first thing we need to talk about is I think we have to establish expectations up front more than ever. And I know you do a really good job of that already with your clients. When you're working with divorce clients, you really have to establish those expectations. The problem is, as you mentioned, is there's a complete lack of trust amongst each other, the marriage has fallen apart, there's no trust amongst the two partners anymore. So they're already in a situation where they don't trust a lot of people. So now you're kind of an extension of that. So you really have to establish trust by staying neutral, and setting those expectations. What things I think you have to do is when you first sit down with them, you kind of have to have that really start meeting and saying, I'm not your divorce attorney, I'm not your friend, I'm not your counselor. And this what's happening between you is completely irrelevant to the situation. My job is simple, I am here to sell the house for you as quick as possible, and to get the most money as possible for you. And then I think you need to establish the ground rules, which is you're going to have communication with both of them. And you're not going to take sides. It doesn't matter who's right or who's wrong in the divorce. It doesn't matter who wants what in this the sale, you have an equal duty and equal obligation, fiduciary duty to both of them. And so you have to stay neutral in this situation. And I tell agents all the time, what you're going to have to do is make sure they understand that any confidential information they provide you will not be provided to third parties, which is a big problem. Have you ever had an agent tell you my clients are going through a divorce? Yeah, yeah. And that's confidential information that you cannot share unless your clients authorize you to share. Because if you tell your the other side that, hey, my buyers or my sellers are going through a divorce, that changes the bargaining power of that party and so that's something that they may not want out there. They The other thing is, you have to let them know is that any communication I have, or any information I have about the real estate transaction is 100% going to be shared with both parties, I'm not going to share it with the spouse, one spouse and not share it with the other. And I'm going to share it in exactly the same manner. Unfortunately, with a divorce, if we don't have documents signed, it really makes it much more difficult. And so what you're probably experiencing is kind of a case by case matter of when you have a divorce order, you can kind of direct your clients back to the divorce order when they have an argument. So do your clients provide you with a copy of their final divorce order when you're working with them? I've never asked what I never had to ask for it. I'm so mad, I bet. Right. And it's a delicate thing. I know Sarah to ask somebody, can I have your divorce papers, perhaps maybe one of the things you could ask for is if they can provide you the section in the divorce order that relates to real estate only tell them you don't need to see the rest of it. But you would like to see that so that you understand who has the right to make the decision who what what the ground rules are, because a lot of the documents, you'll see the attorneys have done a good job saying the property will be listed for 6%, it will be solved for a minimum of $200,000. All closing costs will have to be paid by the buyer. And so I think it's important for you to understand that. But ultimately, I think to get to the larger issue here is when you have one party who just will not cooperate with you, you may have to make that decision to bail. And nobody really wants to have to fire a client. But if we already know that 50% of divorce listings fail, and you have one spouse who wants to sell the property and the other one doesn't. And regardless how well you've done in setting your expectations, and how well you've done of communicating and keeping both parties on side. If they're just not going to cooperate and they're trying to destroy the transaction out of spite, there's really not much more you can do other than just bail. And that's that's an unfortunate thing. But I think that's what you're gonna have to look at. But always remember, and I think the biggest thing to take away from this is remember your duty of confidentiality. And remember that you weren't represent both parties, even if the spouse, one spouse has hired you, and says the other spouse really doesn't care, you still have that equal duty to both parties. Yeah, one thing that I do like and that I've told my clients that are going through divorce is that we have to look at this as not from an emotional side, even though I totally empathize and understand that it is an emotional thing that they're going through, I have to look at as as a business transaction. And that's the best way that they are going to get through is they look at it as a business transaction and try to keep the emotion out of it as best as they can. So we know it's not coming to you all the time. But that's a great word to use their empathy. And that's one of the best ways to try to gain trust of your client is to empathize with them, I understand what you're going through, I know it's an emotional time, I know this is a major change in your life, you've already gone through the change of divorce. And now you're going through another major change with the move. This is hard for anybody to take. But my goal is to help y'all through this. I like how you also mentioned about, you know, making sure that both parties are getting all the information that I have to give it to both of them, I think the technology that we have as agents now really benefits us like with the showing time when you get feedback, I'm easily able to simply share it with both of them. I don't have to copy them in the same email. So they're not having to discuss things, you know, between each other, they're both getting the same information is, you know, unbiased information. And I'm, you know, just delivering it to each of them at the same time. That's a good point. I do think agents do get in trouble where they start texting with one person and not the other or they email with one or they have phone calls with one, I would make sure both are involved at all time, because that's what erodes the trust when the one spouse and typically it seems to me and you correct me if I'm wrong that one spouse is less trusting than the other one. Yeah, I agree. It is probably the one who is at fault in the divorce probably. But it's amazing how that happens. But that one is the one who's going to be constantly in your ear. And when you are the one not providing equal information. That's when they start feeling like you're taking the other spouse aside. And once once one of the spouses thinks you're taking the other side, you're done. It's Oh, yeah, yeah. So then who is responsible for signing documents like the listing agreement, property, disclosure, all of that. So anybody who is an owner of record has to sign those agreements, I think a lot of agents kind of misunderstand that. Because they will look at what the their clients are telling them, the spouse will say, I am getting the house per the divorce decree. And so they only get that one particular spouse to sign it even though there is a the other spouse has the ownership of the property as well. So anybody who has own record, will need to sign the documents. And so I think one of the things that agents might want to change in the way they do their listing agreements is when they meet with the client and ask who are the owners of the property? And they say, Well, I am I think the second question needs to be Has anybody else been an owner of the property since you have and then that's when you might find out, but my ex husband or my ex wife has, and that should throw up a huge red flag that now I really need to know who is on title. And what you need to understand is even though it's easy the situation or other when they're going through the divorce at that time, or the divorce is just fresh because people like Well, my, my ex spouse and I are on it, they just moved out and now we're selling the house. But it's a different situation where an ex spouse is 10 years removed from a marriage. And they're like, Oh, well, I've lived here for 10 years, it's my house. Okay, well, did you ever take your ex spouse off of title, and what you might find often is that they never took their ex spouse off of the deed. And so now they're still an owner. And so that's where it really gets very difficult for you all is finding this ex spouse who may live in Washington state now and saying, hey, I need you to sign documents. Which brings us to the next point of that is, in those situations, when you're dealing with a situation where they have been divorced for a long period of time, and the ex spouse has really has nothing to do with the transaction. Now, let's say husband and wife divorce wife is living in the house ex husband is living in California, and has nothing to do with the property, the wife is going to sell and get all the proceeds. But he's still on title. He's still an owner of the property. So he's gonna have to sign all the documents, the better way of handling that is to contact the attorney and say, Hey, we have an ex spouse from California who's still on title, can we get a quitclaim deed to get him off, get him off before you start listing the property before you start getting contracts before you start having to get documents signed? Because once he gets involved in signing the documents, now he's, he's vested in it, and he wants to know everything. And I can guarantee your client doesn't want to share anything with him. So get with an attorney to get him off title as soon as possible. Don't wait. Do you have a contract? Come in take care of the situation? Yeah. What about when they're arguing over like proceeds actually had last summer this happened where one of the spouses when it got like the day before closing was looking over things and saw that property taxes? And he was asking me, he said, I don't think I should be responsible. I haven't lived there and over a year. And my response was to simply send him to the closing attorney to answer that. But I would love to know your thoughts on that as well. That's a great question. When they are in final divorce, when we have a final order, we simply look to the final court order. The problem is a lot of these final court orders aren't written very well. And here's something that a lot of people may not understand. When a court does an order a written order, disposing of a case, the judge does not write that order. It is written by one of the attorneys of the parties, and then the judge signs, he may change it, if he wants to change it, he or she may change it. But for the most part, the judge was assigned the order of the prevailing party. So a lot of these Divorce Attorneys don't understand real estate. So they'll just put things such as parties to sell property and share money. Okay, well, what money does or is there a how do we divide it? Is it before we take out real estate commission is before we pay the taxes. And in your situation? Like you said, you may have one spouse that's lived in the house 110 15 years since then. And so repairs, what about the repairs, who's going to pay the repair bills is that part of the procedure. So what we as attorneys are going to do is we're going to look to the final court order and see if we can decipher from that, if it's clear cut, what we're going to do is we're going to prepare a document for the parties to sign saying they agree to the just the splitting of the money pursuant to the court order. Most cases, if the court order is very clear, the parties will sign that agreement saying yes, I get 5050 of the of the proceeds the final number, and we're good to go. But in your situation where they were arguing about taxes or repairs or whatever that of that might be, we've got to spell that out in the agreement of splitting the proceeds and have them sign it now. If we don't have a court order, then what we can do and why you would not have a final court order would be the divorce is not final, or there's just separated. And so we have nothing in writing to go by. We're going to ask the two parties to come up with their agreement. What do they what will they agree to and then we'll have them sign an agreement at the closing so that we know how to split the proceeds. But if there is no agreement between the two parties, then we as closing attorneys, we're simply going to make the check out to both parties. And we're going to submit it to one or the others Divorce Attorneys and they'll hold that money in trust until the to the situation is over. Yeah, but it can't get at closing it can get very nasty. Yeah, it can get get kind of wild at the amazing what people fight about when their divorce things they didn't really care about it all that green avocado lamp in the house. They hated it, but now is the biggest sticking point in life. Absolutely. So I've also had issues where like one of my clients in the divorce order. She was living in the house. But the husband was making payments and then her grant her credit got ruined because he didn't pay. Yeah, that's a terrible situation. What happens is, oftentimes you'll find divorce situations where you'll have somebody living in a house that divorce will say wife maintains the house husband makes payments, and what you need to understand and what the clients need to understand is that a final court order does not remove your obligation under the note to keep paying it. So if husband and wife while married, signed a promissory note, at the closing promise to repay the bank, the money that they've gotten to buy the house, just because you get divorce and the divorce says husband to make payments does not negate the obligation of the wife to pay. And so unfortunately, what happens is years may go by, in a situation like that where the husband has made the payments to wife living in the house, and then all of a sudden husband falls on hard times, maybe loses a job due to COVID. And he quits making payments. And of course, he doesn't tell her. And so next thing she knows she goes to refinance the house or sell the house or do something of that nature and buy a new house and all of a sudden her credits ruined, there's not a whole lot to do we can do about that. And so if your clients going through a divorce or in divorce, they just got to keep a look at those things and make sure that the ex spouse is paying the payments, the best thing to do would be to try to refinance that X Files off of the note to refinance the house and get them completely off. And then when the husband makes the payments, make sure that he's providing you evidence that they're being made. But understand if he doesn't make the payments, you better make it. And in some other situations like that, we have seen some lenders, and it may call it where the other spouse was supposed to make the payments, but didn't. Some of the lenders may take that into consideration and doing the doing the loan. But you may find yourself in that situation where you've got your client's house sold, and you've got them ready to buy a new house only to find out that their credit, their credit is terrible. And there's nothing they can do about it. This has never happened to me. But I'm super curious to know your thoughts on what to do if one spouse and if they're both on on the deed, what if one of them just refuses to sell they're like now, I don't want to sell? Yeah, that's it a fun situation when that happens. And sometimes that happens like the day of closing, they've already agreed to do it. And now all of a sudden, they've changed their mind, because it becomes almost like extortion. I've seen spouses that refused to sign it unless you change my alimony payments, or you pay for the college, you know, college for our kids and things of that nature. So you've got a couple issue here. The first thing is if the spouse refuses to sell it, is go back and look at that court order. And what we as attorneys will advise our clients is, look, we don't represent you in the divorce, you have your own Divorce Attorneys. And if the divorce happened years ago, you may need to go back to your divorce attorney. And if the order orders that spouse or sell the house, then they can file what's called a rule to show cause and what that basically says defaulting spouse has to prove to the court why they are not in default of that order, that spouse will have to prove to the judge that they do have the right not to follow that order. And when the court decides they don't, they can hold them in contempt and find them and so forth. If we do not have an order, because let's say they're going through separation, you may have to fall for tip partition action. And a partition action basically says I own the property with somebody else. And I want it solved, they don't want it solved. So I need a court order ordering it to be sold. Well, you can imagine that's going to take a lot of time, and a lot of money. So neither one of these orders or options are very good. So when this happens, you're going to run into a situation where your closing is going to get delayed. It also brings us up to another situation which is kind of similar is that well, I've been talking about now as you know when the divorce is fresh, but the situation where the divorce may have happened 10 years ago, this is the problem we run across more often than than any other situation with a divorce, it becomes a problem is it the spouse has got divorce, say 10 years ago, ex spouse now lives on the west coast. The spouse here is selling the house has completely even forgot that their ex spouse still owns the property. And now we're trying to do a closing and we do a title search and say Where's your ex who's a spouse of yours? Oh, that's my ex spouse haven't talked to them in 10 years don't even know where they live. And so now here we are at closing. And we can't close because we have to have that owner sign over their deed interest. And so that goes back to one of those things of asking, upfront, are you the only owner of this property? Has anybody ever else on this property and when they say well, my ex spouse, before you even listen, it's a good time to go look and pull that deed and see if ex spouse is still on title. And if he is, that's the time to start working on trying to get that spouse from 10 years ago off the title. You got to find that out early and try to get rid of it. I've had I have seen situations where the client selling the house here winds up having to pay cash money to the spouse and California to sign the deed even though the California spouse has every obligation to do it under the divorce order. The seller here understands how long that's going to take to take them to court and how expensive that's going to be. So I have literally seen spouses extort money from each other to get them to do what they were supposed to do in the first place. And then I think we've kind of already covered this already. But it seems to me that the overwhelming theme is that if we don't know we need to look at the Whatever the the court order is. And so I guess that also applies to repairs and things like that as well. Yeah. And unfortunately, a lot of these court orders, don't even cover it. And so we're basically in a situation where we're hoping that these two can get along and figure out how they're going to do it. And if not, we're at a standstill. Unfortunately, a lot of these these documents are drafted without real estate in mind. And so it becomes a problem. Yeah. And then what about like a client who may not want their ex spouse to know where they moved to, they don't want them to know anything once the transaction is final. And that is a big problem. So there's very little we can do to guarantee that that won't happen, the best we can advise you to do is they can go to their newspaper and ask for an opt out form. So for instance, the state newspaper will from time to time published transactions in the newspaper, but I do know that the state newspaper, for instance, there's a forum where you can go and say, Look, I'm in a coming out of divorce, or I've been in a situation where somebody might be stalking me, or things of that nature, or you're in a highly sensitive type of work where you don't need people knowing where you live. So the other thing you can do is you can go online to the website for the county tax page where most people try to find ownership. And you can opt out there. But the problem is, this will not stop somebody from going to the courthouse, and pulling courthouse records, and finding where you live. So the other thing you could do is you could create an LLC, and have the LLC on the property. But this comes with all kinds of loan issues, because most lenders will not loan to an LLC, they'll want you to buy it in your personal name first, and then transfer it to your LLC. So that becomes a loan issue. So you really have to talk to your lender beforehand. So I know there's a clause in the buyer agreement where it talks about, you know, Agent hat has the right, you know, to disclose or to not disclose their clients, you know, name and information. So how do we if we, if that does come up, and a potential buyer might be not quite with the divorce thing, but I think it goes into that as well. How do we then tell them okay, so we won't disclose your name, but then we still have to tell them, but all this is how other people can find it. So like we did our job, but just know this doesn't cover you. And I'll ask, and I think that's a very fair question. And statement is that just because they check the box, they don't want the information shared, doesn't mean you have the ability to stop the county courthouse from sharing, and documents. As you know, all real estate documents are recorded at the register of deeds office, and anybody can walk in there and go to their computer system and type your name in and find out now what you what you own. Yeah, absolutely. Appreciate you being with us today. I think you had a lot of really good questions in there. Yeah. Thanks so much for having me, Gary. And now to our segment what happened while you were out showing, as y'all probably know, from the Todd Cole hub case, that happened up in woodridge. This is where the gentleman murdered and kidnapped several people. And it was later discovered that when he lived in Arizona, that he had a criminal background, which included I think rape, and perhaps a kidnapping and rape, and had the real estate commission been afforded this information, they could have prohibited him from getting a real estate license. The South Carolina State Legislature responded by passing a new law that said that anybody applying for a license would have to be fingerprinted. So anybody that is applying for a salesman position, a broker broker in charge, property manager, property manager in charge, they're applying for that license with the commission, then the new requirement is that sled and the FBI will do a criminal background fingerprint based check of that person's criminal history. And the cost of that is paid for by the applicant. Now, that would include new applicants, but I believe it also based on that way that was written would include somebody who is moving from a sales position to a broker position, or somebody maybe who's a broker moving into a broker in charge position, they would also have to get that criminal background checked. And that is definitely a good thing. Now, the other thing that the real estate Commission has issued on their website is that remote learning is been offered or extended for all educational providers such as Blair Cato, through June 30 2021. So this is an interesting thing and something you need to be aware of, as you probably know, in 2020, with COVID, the real estate commission basically authorized every educational provider to provide education remotely using zoom or Google meetings, and they just approved everybody without having to go through the approval process, which was very good. And they also extended it through I think, was the end of June that you had to get your education. Well, that has now been extended through June 30 2021. So that tells us two things. Number one is that your education this year will not be in person that I think that is pretty clear. The second thing it also tells us is that they will not be extending your time to get your education in this year, June 30 will be the day to have all of your education completed. The good news is Blair Cato is happy to announce that we'll be doing all of Our education in conjunction with the Central Carolina realtors Association. And so we'll be doing that on zoom, and all members of ccra will be able to get that education for free and non members will be able to get it for a very minimal cost. You'll check back on our website at Blair Cato comm you'll have information as to how to sign up and when the dates are. And we'll be doing several dates throughout the spring and in the summer. And the last thing that happened while you were out was showing was the new administration is talking about doing a $15,000 first time buyer tax credit. But I have to ask, is our problem today a lack of buyers, it's not it's a lack of sellers. So poor giving $15,000 to first time homebuyers will only flood the market with more buyers and less houses because first time homebuyers will not have houses to sell. So we don't need more buyers in the market, we need more houses listed. Another thing that happened while you were out showing and now to Gary is good news only. And as I put on this section here, I must start off by saying that I understand that COVID is very dangerous and can be very deadly. In fact, as some of you may know, my cousin passed away from COVID. he contracted it less than a cup about a week before Christmas in less than 48 hours later he passed. So I understand that people 100% do die from COVID. So please don't misinterpret what this section is about. But this section is about isms very disturbing information from the CDC about their death count and how inflated it is. What this article talks about. This is an article by Michael foul th au is that in March of 2020, the CDC announced changes in the way that they wanted doctors to fill out death certificate. Now they didn't talk about any other illness not cancer or heart disease, no other types of death. Only COVID-19 deaths and an outfit called the children's health defense has gone back in July and announced then that the criteria for diagnosing COVID-19 on death certificates was quote, preposterously loose, and that they were bound to create massive and wholly illusory increases in the number of COVID cases and deaths. And so this was what quote what the CDC says to us on a death certificate for a clinical diagnosis of COVID of dying with COVID. One is you have at least two of these symptoms, fever, chills, rigors, Malouda headaches, sore throat, new oral factor, taste disorders, okay, it's one, or it's a big word, or at least one of these symptoms cough, shortness of breath or difficulty breathing. Think of the preposterous nature that if you die with and have a cough, regardless of what your death really was caused by, that on the death certificate is now labeled as a COVID death. Of course, they'll say, well, you also had to have an other type of clinical reason for it. Now, here's the other clinical reason has to be tied to that. You have to have been exposed within 14 days of onset of your symptoms to somebody who is either tested positive, or it was probable for him but not even tested probable that they had COVID, or that you had close contact with somebody who had clinical compatible illnesses, or traveled to or reside in an area with sustained ongoing community transmission. Guess what, that's the whole United States. So according to the CDC, his own method of counting das for COVID, all you had to have was a cough. Or if you had a headache and a sore throat, and you live in the United States, then a doctor could put that down on the death certificate as COVID. So the fact is, when we are told day in and day out by the media and others about all the numbers of people that have died in the United States, this one organization says a number could be inflated by as much as 90%. Now, I don't know whether it's 10%, or 90%. But we have seen stories all over this country for many, many mods, about people from automobile accidents, suicides, drug overdoses, and a number of other reasons, getting on the COVID death numbers when they in fact didn't die of COVID. In fact, the state of Washington had removed I think it was 300 just a couple of weeks ago, because all of those deaths were not actual COVID deaths. So my point being is it's not near as deadly as they're showing it to be now do it. Can people die from it? Absolutely. My cousin died from it. People are dying from it every day. That is not to say that it's not happening. But when you see that 300,000 person number, you have to look at that with a high level of skepticism. Understand that is good news because the 300,000 people haven't died from COVID. That is good news that the COVID virus is not as deadly as it is continually reported. And that was our show for this week. We hope you enjoyed it. And we look forward to having you come back next week and listen to us again, we'd ask you to please subscribe, like and share our podcast so you continue to grow this. Thank you. I hope you'll have a great week.