ALM Properties, Inc.
Page printed from: The Legal Intelligencer
Select 'Print' in your browser menu to print this document.
Attorney and Realtor Cooperation After Client's DivorceHere he comes, the client in immense emotional distress, freshly separated from his wife of several years or even decades. The best well-meaning matrimonial lawyer can't address all his needs, but he or she can start on some of the more important material ones.
2013-07-09 12:00:00 AM
Here he comes, the client in immense emotional distress, freshly separated from his wife of several years or even decades. The best well-meaning matrimonial lawyer can't address all his needs, but he or she can start on some of the more important material ones. And it is in that space that an unusual partnership might emerge — between you, his divorce lawyer, and the realtor who is going assist him in finding a short-term or permanent home for the new life upon which he (and maybe his children) will be embarking.
Too often, the relocation thrust upon him as a result of the breakup of the marriage presents a whole host of changes for this client. These changes (financial, custodial, etc.) can place real estate agents and attorneys on a collision course. Why does it happen? What are the causes? Can the threat of conflict be avoided? Yes, the farmer and the cowboy should and can be friends.
Relocation adds stress to an already overwhelming situation. Stephen Ruben, one of our co-authors, gets it. He was a practicing attorney before becoming a licensed real estate salesman. Several years ago, he was divorced with two young children. He worked with a broker who understood and empathized with his situation and who collaborated with his matrimonial attorney to meet the economic, custodial and legal consequences of moving out and moving on. It was a tough time but they got through it.
The lawyer whose client needs to obtain new housing should work together with the realtor to ensure that the client's housing budget is a realistic expectation as to what he or she will be able to afford once the divorce is over.
In addition to helping the client find new housing when marital residences are being sold as a consequence of a divorce, realtors and lawyers must often work together during the course of a divorce matter to get the parties (who can be extremely adversarial) to work together to serve both of their interests.
Decisions often have to be made to sell the family home or sell or rent the vacation home because the parties need the income to cover the expenses now that they are supporting two primary residences on one salary. All of these situations will require the parties to both agree on a real estate agent and work collaboratively with that agent. The parties often cannot agree on when to sell or for what price and the courts will appoint an agent or set the price or direct that the agent can set the listing price. When the agent is put into such a position — either by being jointly selected by the parties or their attorneys, there are things the real estate agent can do in order to make the process go more smoothly.
First, the real estate agent needs to assure both parties that he or she is neutral and working for both of them. The agent should be sharing all of the same information with each party — if not simultaneously by email then as close to simultaneously as possible. The parties need to trust the agent and if one party feels the other is being favored, it will only make the attorney's job and the agent's job more difficult. Transparency is the key to gaining trust.
Second, many times, one party will have an idea of a price in mind that is simply unrealistic. The agent needs to be prepared to suggest a price and back it up with comparables, market research and even second opinions, giving both parties supporting information as to where the market is and what the price should be. Getting agreement on the price and other important terms will create one less obstacle for the lawyers to overcome.
Third, when a house is being sold, one party may want to make improvements to the property in order to get the best price and the other may simply not care to put any more money into the property and will want it sold "as is." The agent should be prepared to deal with this dispute and suggest the minimum repairs to make the property salable and what other repairs may make a real difference in the price the parties are trying to achieve. Again, agents, do your job. Attorneys, let the agent shine when it comes to pricing and marketing. Attorneys can often draft deals where the party who pays for the improvements gets reimbursed those funds off the top of the sale proceeds prior to equitably distributing the remaining proceeds.
Fourth, attorneys need to get their clients in line to make sure they are complying with the realtor's requests for showings and open houses. A spouse who always has an excuse for denying access must be prepared to defend a claim of dissipation of assets. That spouse may find himself or herself in hot water with the judge if the sale of the house was court-ordered and a judge believes he or she is playing games to delay the sale. His or her share of the ultimate sale proceeds may be reduced.
Finally, when the house is sold and it's time for settlement, the agent should be sure to get the settlement sheet to both parties and prepare in advance in conjunction with all attorneys (real estate and matrimonial) regarding what to do with the proceeds. If there is a court order, it may direct that the proceeds are to be held in escrow. If not, it may be time for the parties to agree what portion each gets. The night before closing is not a good time. The sooner agreement is reached on proceeds distribution, the better it will be for everyone, including the purchaser who has no interest in getting in the middle of a war between unhappily married sellers.
Marital breakup is never pretty, but a great matrimonial lawyer and a smart, reasonable real estate broker can enhance rather than detract from the anxiety level of the only person that matters in a separating spouse's transaction: the client.
Let's get the compensation off the table. Obviously, the lawyer is paid on the clock and the broker only on the successful completion of a relocation transaction. The lawyer's possible commission envy and the broker's fear of the lawyer as a dealbreaker may be important to them, but these misperceptions should be set aside in the interests of the clients. Too often, as closing approaches and the lawyer uncovers more issues or perceived broker missteps and the broker asserts that the lawyer is being too technical, it can spill over to hassle and the blame game. There is no room for this stuff in any transaction, particularly one arising from marital discord.
Let's be clear, though. There are matrimonial and real estate legal issues — like how the prepayment of taxes should be allocated between the parties — that the attorney is best suited to address without realtor input. There are business issues — price, size, location, amenities and terms — that the real estate agent knows and understands and that the lawyer should avoid. There are also mixed questions of business and law co-op finances and apartment financing, for example, where the advice and counsel of both agent and attorney are important. There are situations or terms in a bid, which to an attorney may seem unfair to the client, when, in fact, the broker has negotiated as well as he or she could with a difficult purchaser.
Unlike a commercial situation, where a broker may connect with a lawyer only after a term sheet or successful bid has been made, relocation arising from matrimonial disputes gives rise to a host of business issues and legal, evidentiary and custodial issues beyond the terms of the lease of the successful bid. It is imperative that the lawyer and the broker, with the permission of the client, speak at the earliest possible moment and as often as the terms and circumstances require. The client could unwittingly give the broker inaccurate information about his or her liquidity. The broker could miss important facts about the potential custodial situation that are relevant to the relocation process. These transactions require some unpaid time, particularly by the broker, to get up to speed and get it right and to deal with a client whose world is forever changing.
Marital breakdown is in a very small way like a death in the family and despite one's insight and wisdom, there is always uncertainty, worry and fear for the future of the individual and, of course, the children. Pile on the in-laws and the last thing any client needs is a broker and matrimonial lawyer who won't willingly collaborate.
Smart lawyers and brokers protect their turf but always should ensure that the parties they have in common are getting the best cumulative advice from their professional counselors. You see, the farmer and the cowboy could be, should be and must be friends.
Stephen Ruben is a licensed real estate salesperson in New York. For more than 20 years, he was a practicing real estate lawyer and has served as a teacher, broadcaster, author and business development executive and coach. He works with clients who buy, sell, lease and invest in real estate in New York City.
Michelle Piscopo is an attorney in the matrimonial group of Blank Rome in Philadelphia. She represents individuals in the negotiation and litigation of complex matrimonial matters. Contact her at firstname.lastname@example.org.