Matrimonial issues may affect titles to real estate and, therefore, create issues for you.
To begin on a happy note, an engaged couple may purchase a home before their big day. The non-married will likely take title as tenants in common or joint tenants with the right of survivorship. The distinction is that, upon the death of a joint tenant, his or her share automatically vests in the survivor. Upon the death of a tenant in common, his or her share travels the avenues of inheritance. If there is a will, it will state where the property, or the residuary of the estate, goes. If he or she dies without a will, then the commonwealth’s laws of succession control.
Whether an engaged couple should take title as tenants in common or joint tenants with right of survivorship is a matter only they can decide. Frequently, the question may turn on who is funding the purchase, but there is no right or wrong. Your buyers need to understand the issues and should be directed to their lawyer.
There is an additional issue for the engaged. Once married, a new avenue of ownership is available, tenancy by the entireties. To jump to this status, a new deed is required, as it is not automatically acquired upon marriage. When husband and wife hold title in this manner, the property automatically vests in the survivor upon a death, and while this sounds like joint tenancy with right of survivorship, there are distinctions. The creditor of one joint tenant has access to the debtor’s interest in jointly held real estate. A creditor of a husband or wife does not have access to his or her share when the property is held as tenants by the entirety. The bottom line is that if your clients are purchasing their property before marriage, make sure they understand the need to meet with their lawyer between marriage and honeymoon (or shortly thereafter) to revisit the issue of title.
On the downside, should that once-happy couple become embittered to the point of divorce, you will be presented with other issues. If the estranged couple seeks to sell their home, they may turn to you to list the property. Be forewarned. Will both husband and wife sign your listing agreement, and will they agree to terms of a sale? Even happily married couples have their opinions when it comes to selling their real estate; imagine how difficult it is when they are estranged. Consider a short listing.
In most situations involving divorce, the estranged couple will negotiate a marital separation/property agreement before the divorce is final. Frequently, those agreements will provide that one will take title to the real estate, while other marital assets will be transferred to the other. In contemplation of consummation of the settlement agreement, the spouse to take title may seek to list it. This presents a problem for the listing agent, who is required to have the written agreement of the owners before marketing the property for sale. The title will show that both husband and wife are owners, despite their agreement that the property and its proceeds are to be considered the asset of only one. The best practice is to obtain the signature of both husband and wife. If you can’t get the signature, a letter from that non-signing spouse’s attorney saying it is agreed to that the listing spouse has the authority to list and sell the property with the proceeds going to that spouse will be sufficient. Having a copy of that provision of the marriage settlement agreement in your file is also helpful.
Not all matrimonial issues involve divorce. Consider a recent call to the hotline involving the death of a husband whose son sought to list the father’s home, claiming that he was the heir to his father’s estate, including the home. At the time of his death, the father was living in the home with his wife, stepmother to the man claiming to be heir.
The listing agent checked with the recorder of deeds and determined that title to the property was held by father and stepmother as tenants by the entireties. The son claimed, however, that by virtue of a prenuptial agreement between his father and stepmother, she did not have an ownership interest in the property. By the way, the son is a lawyer and bandied that fact about in every other sentence!
You don’t need to be a matrimonial or property lawyer to figure this one out. Don’t take a listing where there is an ownership dispute until the matter is resolved. Why risk the time and effort in marketing a property if it is likely to be disrupted by litigation? The fact that title was in the names of both husband and wife would alone be sufficient for me to not heed the son’s claims of ownership without something more, like a deed or final court order. Even then, seek advice.
Ultimately, let good sense be your guide. If a property is titled in two names, seek the agreement and signature of both parties. If parties can’t make decisions or don’t get along, anticipate that the bickering will continue throughout the transaction. Value your time. Let someone else deal with the problem client while you put your efforts to more productive uses. This is, of course, very general advice. When you are confronted with issues of ownership and division of property, consult your lawyer when you are less than certain as to how to proceed.