When Only One Spouse Is on Title: Practical Risks in Divorce

In many divorce cases, the home is titled in only one party’s name. This can happen when the property was purchased before the marriage, or when one spouse was removed from title during a refinance. I’m seeing this scenario with increasing frequency, and it often creates serious complications once a sale is required.

Although a non-titled spouse may have a community or equitable interest in the property, they are not a legal owner. As a result, they are not a party to any listing or purchase agreement. Simply put, a person cannot legally sell—or direct the sale of—property they do not own.

Real estate contracts are built around ownership. Realtors owe fiduciary and contractual duties only to the titled owner(s). Similarly, escrow and title companies are obligated to recognize and take instruction solely from those listed on title. Every participant in the transaction looks exclusively to the legal owner for authority.

From a practical standpoint, this means a non-titled spouse has no control over:

• Selection of the brokerage, listing price, price reductions, commission, or length of the listing

• Marketing decisions, open houses, lockbox access, or signage

• Acceptance or rejection of offers, counteroffers, repairs, escrow terms, buyer credits, or choice of buyer
  

Additionally, the Realtor has no duty—and often no legal ability—to communicate transaction details or take direction from the non-titled spouse or their counsel. In the context of the sale, their role is effectively no different from that of a tenant.

Perhaps most critically, the non-titled party has no authority over how sale proceeds are distributed.

It’s also important to note that recording a lis pendens does not restore any of this lost control. A lis pendens merely alerts the closing officer that the matter must be resolved before closing. By the time it becomes relevant, the key real estate decisions have usually already been made.

These are just a few of the challenges that arise when only one party is on title. When representing clients in this situation—particularly when a sale is anticipated—you may want to consider appointing a CDRE™ and including language requiring equal communication with both parties. In the event of a dispute, counsel can be notified before any documents are executed.