When a couple decides to divorce, one thing they need to do is make a decision about their home. One option of course is to sell. If you haven’t found yourself in the position of representing divorcing sellers, there’s a good chance you might. It pays to be clear on what you need to know about representing divorcing sellers to protect yourself and your business.
The key thing to keep in mind: your fiduciary responsibility to both sellers remains the same.
The Challenge of Representing Divorcing Sellers
Divorcing sellers are not always aligned in their goals and interests. That makes things challenging for the real estate agent representing divorcing sellers because you have a responsibility to both parties. (As in dual agent situations, you need to be careful about how you handle your fiduciary responsibilities.)
Recently, we talked with a listing agent who represents both the husband and wife as a seller’s agent. His clients are divorcing and using a mediator,so neither one has a lawyer.
Since the couple listed the house, the husband has decided he wants to remain in the home. He is not cooperating with the showing schedule and fails to keep the home in show condition. He is generally just difficult to deal with. (Read more on dealing with uncooperative co-owners.)
The agent suggested to the wife that she seek an attorney to help with the situation. Now he wonders if he is at risk of a complaint of breach of fiduciary duty because of this suggestion?
You know you should refer clients to an expert when matters come up beyond your area of expertise, whether that expert is a lawyer, contractor, or other expert. So the suggestion to work with a lawyer is not a bad idea. However, it’s important to remember that the agent has a fiduciary responsibility to both sellers. To meet that obligation, the agent should give the same advice to both clients.
Protect Yourself When Representing Divorcing Sellers
To protect yourself and your real estate business,take these three steps:
Give the same advice to both parties. When you’re representing both the husband and wife as sellers, you need to give both the same advice to meet your fiduciary duty.
Stay out of arguments. Depending on your clients and their relationship and communication, this may be hard, but it’s necessary. Don’t take sides. Ask clients to come back to you when they’re ready to talk without putting you in the middle.
Document all communication. Send all conversations and guidance to both parties. This includes standard information you share with clients and responses to questions. If one person calls you, summarize the call in writing and send it to both people. Keep a copy for your files. Make sure you demonstrate that you gave the same advice to both sides and that your advice benefits both people equally.
Finally, you may wish to consider terminating the listing contract if matters get progressively worse.
This advice applies anytime you have more than one seller, and your sellers have different interests in the situation.
If you’re a CRES client and have a question about fiduciary duty when you have more than one seller, call the CRES ClaimPrevent® Hotline. The hotline is available to our clients 7 days a week to help with any issues that put you at risk. (And we guarantee a response within 4 hours or next business day, with recommendations confirmed in writing.)
What is the biggest challenge you’ve faced with a divorce sale?
This blog/website is made available by CRES Insurance Services for educational purposes to give you general information and understanding of legal risks and insurance options, not to provide specific legal advice. This blog/website should not be used as a substitute for competent legal advice from a licensed professional attorney in your state. Claims examples are for illustrative purposes only. Read your policy for a complete description of what is covered and excluded.
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