Working with divorcing clients can be both extremely challenging and extremely rewarding. With divorce rates expected to soar in the coming months, it is important to arm yourself with the knowledge you need to assist clients in working through the sale of their home under stressful circumstances.
At the outset, it is crucial for you to be aware that the law treats common-law partners and married partners very differently, particularly when it comes to the sale of the property they resided in at the time of their breakup.
When a couple is married legally, the house they reside in together, which is referred to by the Ontario legislation as a “matrimonial home,” receives special treatment under the law. Both spouses have legally enforceable rights to the property regardless of who is on title, and therefore both spouses must sign the listing agreement and offers (an exception to this is when the sale is court ordered and the order states that one party can sell the property without the other’s consent).
When a couple is common law (in which case, the property they resided in together is not referred to as a “matrimonial home”) and only one partner is on title, the titled partner is the only one who needs to sign the contracts and offers. In these situations, you will not need to obtain the other partner’s consent. However, you will still encounter situations in which the parties are common law and both are on title, and in these cases, they will obviously both need to sign the contracts and offers.
Managing difficult dynamics
The first thing to consider when dealing with the sale of a matrimonial home (in the case of married couples) or a jointly owned home (in the case of separating common law partners) is why the house is being listed. There are a variety of answers to this question and each one will affect the strategy in dealing with your clients and the sale. The most common scenarios are:
- Neither party wants to continue to reside in the home because they both would like to move on. This is the easiest situation and most similar to the sale of any other home. The clients are co-operative and simply want the best price they can get for their home. Do a great job and hopefully at least one of the parties will want to purchase with you as well! This ideal situation is unfortunately the least common scenario.
- One party would like to stay but cannot afford to do so. The other party is willing to sell their share to their former spouse at fair market value but it is not financially feasible for them. This is a sad situation and the party who wants to stay will be struggling with the loss of the home in addition to the end of the relationship. Be compassionate by easing the sellers into the process and consulting them regularly during the listing process. In many cases they are feeling like their lives are out of control and they prefer to have a say in as much as possible.
- One party would like to stay in the home but the other party is forcing the sale and is unwilling to sell to their former spouse at any price. Someone is extremely hurt and getting back at their spouse is their only focus and concern. Sympathy and restraint are required here. Often there will be drama. The best way to deal with this scenario is to keep the conversations focused on the sale of the house and offer as much professional support as possible. Do not get involved in the details of the marital breakdown or the divorce process.
- Both parties would like to stay but neither is willing to sell their share of the home to the other party. This will be similar to option 3 but slightly more acrimonious. It should be handled similarly. This scenario would be the ideal one to include a collateral agreement in the listing paperwork.
- The sale has been court ordered. This is the trickiest scenario of all. Stay in touch with your client’s lawyer throughout this process, if possible. There is no such thing as documenting this transaction too much. Always ensure that you get a copy of the court order prior to listing and that it has all the necessary details and a proper stamp.
Bring your A-game
The ideal situation is being the listing agent for both parties because it allows you to control the situation more effectively. In this case there is usually better co-operation between the separating/divorcing couple and therefore more trust in you as the agent. After all, they have agreed to work with one single agent.
Present your listing presentation to both parties simultaneously. This can be done in person or virtually over Zoom or other similar technology.
Provide detailed information about the listing process and what is involved, including the preparation of the house for sale, the pros and cons of different marketing strategies, and how you will deal with offers together as a team.
Be confident of the value of the property. This is always important, but it is more critical than ever in this environment. Provide the sellers with values and be clear about the market conditions, the comparables and anything else that may be affecting their property value, whether these factors are within their control or not. Be prepared to answer any and all questions on this topic, as it is common for each of the parties to have their own opinion of what the house is worth, and the disparity can be huge depending on the situation.
If you are co-listing with another agent, things can get a little trickier. Sometimes it can be a blessing.
The most common reason for having two agents sell the matrimonial home is that the divorcing couple are unable to agree on one agent – usually because neither party trusts the other and therefore they can’t agree on an agent (and often on anything else).
Remember that even though one spouse has their own agent, you are both representing both sellers. Unfortunately, not all agents understand this concept and so it is your job to help them understand this and to get them on board so you can represent the sellers professionally and keep their interests at heart.
Most of the issues that come up when two agents are representing the couple relate to the following tasks, responsibilities and decisions:
- Which brokerage will be the primary listing brokerage
- Listing price
- Showings – times, who will be notified and how, who will confirm
- Prepping the home
- Real estate lawyer
As a general rule of thumb, if the parties cannot agree, it is best to follow this plan:
- (a) The primary listing agent represents the party residing in the home
- (b) The listing price is agreed to by the parties based on a consensus reached by both agents, who must get on the same page
- (c) Marketing is done by both parties’ agents for a bigger reach
- (d) Showing times are determined by the person residing in the home but must be reasonable
- (e) All parties are notified of requested showings and whether they are approved or not
- (f) Prepping the home and staging the home depends on a variety of factors to be negotiated based on what needs to be done
- (g) The real estate lawyer is selected by the parties based on recommendations from the agents
Just as in the course of a normal sale, all parties must be kept in the loop regarding showings, feedback, offers and more. Both sellers as well as both agents should be aware of everything – it is important that all parties are making decisions based on all of the information available. It is also important that both sellers feel they are getting the same information.
Dos and Don’ts
Do not get involved in the clients’ drama, stories and divorce process. This can be detrimental to all parties involved. It is your job to do what is best for the sellers – sell the home for the most money in the shortest amount of time. That is your job. Your job is not to judge the other party, make decisions based on one party’s needs over those of the other, or to share opinions on anything other than the real estate transaction.
Be sympathetic – after all, this is a terrible time for your clients in most cases, whether they wanted to end the relationship or not. However, do not get emotionally involved as it may cause you to make poor decisions that negatively affect your clients. Be impartial and help them achieve their ultimate goal.
And finally, put everything in writing – for your sake and for your clients’ sakes.
We all take notes and keep files on our clients, but the amount of detail that is required on these files is exceptional. Anything that you put in writing can be shared, so be mindful of that as well. Send the party you represent an email and it may end up in an affidavit down the line. Think before you hit send! Staying professional and neutral will make this easier.
Some of these sales can be extremely challenging and will require you to use skills and resources that aren’t required in other transactions. I hope that these tips will help bolster your confidence in these situations.