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How can divorce affect a residential short sale?

When Charleston couples exchange vows, one of the first decisions they might make is to purchase a home together. When married couples assume joint ownership of a home, both spouses' names go on the title and mortgage. Moving forward, this means that any sort of real estate transactions must be approved by all parties listed on the house's deed.

Of course, the reality is that some couples decide to get divorced after buying a house. Even though the couple is legally separated once the divorce is finalized, both names might remain on the deed of the house until further action is taken. This means that the property can't be sold -- through short sale or any other means -- without the approval of both spouses named on the deed.

One man and his family ran into complications following divorce. The man assumed his share of responsibility for the mortgage, and soon fell into debt. In order to avoid foreclosure, the man "deeded" the house to his parents. Even though the man and his wife are divorced -- and she discharged her share of mortgage debt via bankruptcy -- her name is still on the deed. Unfortunately, the ex-wife will not sign off on the short sale proceedings.

This is a case where legal details are very important. For example, this is one solid reason for divorced couples to make sure the parties listed on deed and mortgage accurately reflect who owns the property. Clarifying these aspects of home ownership can remove obstacles down the road.

Of course, the man and his parents would like to seek financial relief from an underwater home mortgage. They understand that a short sale is likely their best option, but they ran into trouble. In order to find relief and a new start, they will have to determine what legal options exist to rectify the situation.

Source: Sun Sentinel, "Real estate Q&A: Son's ex-wife blocking short sale," Gary M. Singer, May 26, 2013

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