Imagine if you are a lay person in the process of selling your home or other real property, and you are told by the title company that your ex-spouse from over ten (10) years ago is still in title to the property.
“What? But my divorce decree says the property is mine!”
As a real estate attorney, whose practice is focused on title, this is a common problem that runs through my office, improperly drafted real estate documents and divorce decree language. However, any good real estate and/or family law attorney knows that the closing documents can affect one's personal and financial future and therefore must be drafted accurately. This begs the
question: How can attorneys ensure this happens?
When there is a divorce and the parties' own real property, a title company will look to the divorce decree for the division of the property. What real estate closing documents are often required to be drafted in a divorce proceeding to mirror the language of a Texas divorce decree?
A divorce decree can act as a deed and transfer title to an awarding spouse. The divorce decree must contain “words of conveyance”, meaning the divorce decree states the divorce decree will be transferring “all right, title, and interest” in the specific real property to act as a muniment of title. Gordon v. W. Hous. Trees, Ltd., 352 S.W.3d 32 (Tex. App.—Houston [1st Dist.] 2011, no pet.). Per Texas Property Code Section 28.001, “[r]eal property includes land, leaseholds, tenements, hereditaments, and improvements placed on the real property.” In Texas, a mineral interest is also real property. The divorce decree cannot just contain an address of the real property to be conveyed. It must refer to an accurate legal description, otherwise the divorce decree lacks notice. Finally, a certified copy of the divorce decree containing the proper words of conveyance and a legal description will be required to be filed in the real property records in the county where the property is located.
The divorce decree may require a Special Warranty Deed to be signed within a specific time to the awarding party. As a practicing real estate attorney, I prefer this requirement rather than soley using the divorce decree to act as the transferring document. To be a Special Warranty Deed, the deed must contain the following words: "I do hereby bind myself, my heirs, executors, administrators, and assigns to WARRANT AND FOREVER DEFEND all and singular the said premises unto the said Grantee, her heirs and assigns, against every person whomsoever lawfully claiming or to claim the same or any part thereof, by, though, or under me, but not otherwise." The Grantor guarantees title only for the time that he/she owns the property. After the spouse signs the Special Warranty Deed within the specified period or recommended to include a specified period in the divorce decree, the deed must be filed of record. The Special Warranty Deed must be filed of record within the stated time in the divorce decree, or it is prudent to include a specified time if you are the drafting attorney.
Beyond the divorce decree or a Special Warranty Deed, there are other real estate documents that play an important role in the division of property. This is when problems begin to arise and clients reach out to real estate attorneys to assist in navigating through the potential problems, especially after the fact. The goal is always for the attorneys involved in the divorce proceedings to reach out to the professionals who are familiar with handling similar situations to draft the applicable real estate documents and not just rely on the terms in the divorce decree. This will allow for two routes of enforcement, via a motion for enforcement of the divorce decree, breach of contract, or possibly even foreclosure.
What happens if both spouses are borrowers on the mortgage and the awarding spouse is unable to refinance at the time of the divorce? The divorce decree should contain terms requiring the awarding spouse to sign a Deed of Trust to Secure Assumption within a stated period. The Deed of Trust to Secure Assumption attaches a lien on the property, allowing the non-awarding spouse the ability to foreclosure on the interest of the awarding spouse if he or she fails to pay the mortgage. Language in the divorce decree setting out a date to have the mortgage refinanced to remove the non-awarding the spouse from the mortgage or selling the property should always be the goal but the drafting attorney must not forget to add those terms to the divorce decree.
My office often receives calls from potential clients who have been divorced for several years and go under contract for the sale of “his or her” home to find out that the other spouse is still on title. Even worse, the non-awarding spouse has passed away. The best outcome is that the potential client states that the non-awarding spouse is willing to sign over their interest. What happens when the non-awarding spouse is not willing to sign.
In this situation, our office will begin by drafting a demand letter setting out the terms of the divorce decree and what could happen if the non-awarding spouse fails to cooperate; we refer the client to a family law attorney for a motion for enforcement of the divorce decree and request for attorney's fees. There are times when the awarding spouse may have to open probate proceedings as to the deceased ex-spouse to remove the ex-spouse from title.
The disconnect between divorce decrees and real property can be minimized. It begins with practicing attorneys collaborating as to the property division. The goal should be for the family law attorney to navigate and negotiate the matter in terms of the family code. The real estate attorney should be there to make sure the property division is in line with the divorce decree by drafting the appropriate real estate documents. Collaboration across disciplines can also help in the reduction of possible legal malpractice claims.
