Attorney and Realtor Cooperation After a Client's Divorce

Relocation adds stress to an already overwhelming situation. The lawyer whose client needs to obtain new housing should work together with the realtor to ensure that the client's housing budget is realistic and affordable.

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 to get the parties (who can be extremely adversarial) to work together to serve both of their interests.

How Can a Realtor Help?

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 involved in supporting two primary residences. All of these situations will require both parties to agree on, and work collaboratively with, a real estate agent. If the parties cannot agree on the timing and price, the courts will appoint an agent, set the price or direct that the agent set the listing price. There are things the real estate agent can do in order to make the process go more smoothly.

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 e-mail, 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 job of the attorney and the agent more difficult. Transparency is the key to gaining trust.

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.

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 from the top of the sale proceeds prior to equitably distributing the remaining proceeds.

Attorneys need to control their clients 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 is time for settlement, the agent should be sure to get the settlement sheet to both parties and discuss with all attorneys (real estate and matrimonial) the disposition of the proceeds. If there is a court order, it may direct that the proceeds are to be held in escrow. If not, the parties need to determine the distribution. 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 knowledgeable matrimonial lawyer and a smart, reasonable real estate broker can smooth out the process.

The Issues

Take 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 becoming a deal-breaker may result in a tense relationship and cause problems for the clients.

Nevertheless, there are matrimonial and real estate legal issues ' for example, 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, but which the lawyer should avoid. There are also mixed questions of business and law, e.g., co-op finances and apartment financing, where the advice and counsel of both agent and attorney are important. There are situations or terms in a bid, which an attorney may deem 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 or the successful bid. It is imperative that the lawyer and the broker, with the permission of the client, communicate 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.

Conclusion

Marital breakdown is in a very real way like a death in the family. Despite one's insight and wisdom, there is always uncertainty, worry and fear for the future of the individual and, of course, the children. The last thing any client needs is a broker and matrimonial lawyer who will not willingly collaborate.

Smart lawyers and brokers can protect their turf but always ensure that the parties they represent are getting the best cumulative advice from their professional counselors.

Stephen Ruben is a licensed real estate salesperson in New York. 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 [email protected]. This article also appeared in The Legal Intelligencer, an ALM sister publication of this newsletter.

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 cannot 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 to assist him in finding a short-term or permanent home for the new life upon which he (and maybe his children) will embark.

Relocation

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, it can.

Relocation adds stress to an already overwhelming situation. The lawyer whose client needs to obtain new housing should work together with the realtor to ensure that the client's housing budget is realistic and affordable.

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 to get the parties (who can be extremely adversarial) to work together to serve both of their interests.

How Can a Realtor Help?

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 involved in supporting two primary residences. All of these situations will require both parties to agree on, and work collaboratively with, a real estate agent. If the parties cannot agree on the timing and price, the courts will appoint an agent, set the price or direct that the agent set the listing price. There are things the real estate agent can do in order to make the process go more smoothly.

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 e-mail, 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 job of the attorney and the agent more difficult. Transparency is the key to gaining trust.

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.

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 from the top of the sale proceeds prior to equitably distributing the remaining proceeds.

Attorneys need to control their clients 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 is time for settlement, the agent should be sure to get the settlement sheet to both parties and discuss with all attorneys (real estate and matrimonial) the disposition of the proceeds. If there is a court order, it may direct that the proceeds are to be held in escrow. If not, the parties need to determine the distribution. 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 knowledgeable matrimonial lawyer and a smart, reasonable real estate broker can smooth out the process.

The Issues

Take 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 becoming a deal-breaker may result in a tense relationship and cause problems for the clients.

Nevertheless, there are matrimonial and real estate legal issues ' for example, 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, but which the lawyer should avoid. There are also mixed questions of business and law, e.g., co-op finances and apartment financing, where the advice and counsel of both agent and attorney are important. There are situations or terms in a bid, which an attorney may deem 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 or the successful bid. It is imperative that the lawyer and the broker, with the permission of the client, communicate 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.

Conclusion

Marital breakdown is in a very real way like a death in the family. Despite one's insight and wisdom, there is always uncertainty, worry and fear for the future of the individual and, of course, the children. The last thing any client needs is a broker and matrimonial lawyer who will not willingly collaborate.

Smart lawyers and brokers can protect their turf but always ensure that the parties they represent are getting the best cumulative advice from their professional counselors.

Stephen Ruben is a licensed real estate salesperson in New York. 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 [email protected]. This article also appeared in The Legal Intelligencer, an ALM sister publication of this newsletter.