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Court of Appeals clarifies remedies to sell marital home in face of one party’s intransigence

Part of the family court’s goals in affecting an equitable distribution of separated spouses’ marital property is severing all entangling legal relationships and placing the parties in a position to begin anew.  Often the hardest item to disentangle is the marital home.  Even before the recent downturn in the housing market, there were numerous cases in which the marital home needed to be sold in order to effectuate equitable distribution.  With many couples now lacking equity in their home, “distributing” the home often requires the couple to bring cash to sell the home–often cash they don’t have.

Frequently the spouses’ incentives to sell the marital home are misaligned.  The spouse who wanted, but didn’t get, to keep the marital home  may try to delay the sale to remain in the home as long as possible.  Sometimes one spouse receives a portion of the equity but has no responsibility for the ongoing debt and can increase his or her equity by delaying the sale.

Clients, and their attorneys, have developed myriad strategies to delay the sale of the marital home in the face of a final order requiring the home be sold.  I’ve participated in two appears in which my client delayed the disposition of the marital home for years.  In Garrett v. Garrett my respondent-appellant wife was able to remain in the marital home, rent free, that was awarded to husband as part of a May 6, 2003 decree of divorce, until July 30, 2007, when the Supreme Court denied certiorari.  In Fernandes v. Fernandes, my appellant husband was ordered to sell the marital home as part of a September 9, 2004 order.  On appeal he unsuccessful fought for the right to buy out his ex-wife’s interest in the home.  However, even upon remand, further litigation brought by wife did not advance the sale of the home.  My client was finally able to purchase his ex-wife’s interest in the home on November 3, 2009.

The March 30, 2011 Court of Appeals opinion in Brown v. Brown, 392 S.C. 615, 709 S.E.2d 679 (Ct.App. 2011), provides the South Carolina family court bench, bar and litigants guidance into what a family court judge can and cannot do to effectuate the sale of the marital home when a final order requires the home to be sold but does not reserve jurisdiction to handle disputes arising from the marketing of the home.  In Brown, the June 9, 2006 decree of divorce required:

[Wife] should be given the option of purchasing [Husband]’s remaining equity in the amount of $60,191.02 either by refinancing the marital residence, taking out an equity line, or by other independent means within ninety (90) days from the date of the entry of this Final Order.  If she is unwilling or unable to buy out [Husband]’s equitable share, the marital residence shall be placed on the market with an agreed upon realtor for the sale price of at least $225,300[.]  [Wife] will continue to remain in the home until it is sold and be responsible for all expenses associated therewith.  Once it is sold, the parties shall divide the net proceeds so that [Husband] receives 32.14% of the net proceeds but shall not exceed $60,191.02[.]

The order was silent as to how the parties should proceed if the home were placed on the market but did not sell.  With this order giving Wife no incentive to sell the home or pay Husband in a timely manner, the home, not surprisingly, didn’t sell.  The parties brought cross rules to show cause regarding the marketing of the home, resulting in a consent order (from a different judge than the one who issued the divorce decree) in which the parties agreed:

The listing Agent shall have the authority to determine the listing price, provided however, the house shall be sold at the highest and best price attainable . . . and upon the best terms attainable under current market conditions in a timely fashion and as soon as practicable. . . . If the house is not sold or under contract within [a] ninety (90) day period, the parties may agree to continue with said agent, may mutually agree on an alternative agent or if they are unable to agree, may return to this Court for further Order in connection with the sale of the family residence.

That new judge selected a realtor who listed the home for sale, and Wife executed a listing agreement setting the sale price at $274,000.  The home did not sell.  Some nine months later, Husband filed a motion for relief seeking an order requiring Wife to purchase his equity in the marital home, refinance the home or reduce its selling price, pay him post-judgment interest on the amount of his equity in the home, and pay his attorney’s fees related to the motion.  That motion was heard by the judge who issued the divorce.  She modified her own order by “clarifying” it, claiming her original divorce decree had contained clerical errors.

This “clarification” awarded Husband post-judgment interest at 11.25% per annum on the amount of his equity in the marital home, renewed the requirement that the home be listed for sale and establishing a plan for determining the listing price.  The family court judge based her decision to award Husband post-judgment interest on the court’s authority to correct clerical errors under Rule 60(a), SCRCP, and upon a finding the terms of the divorce decree addressing Husband’s equity in the marital home were ambiguous and required further construction.  She imposed new requirements for sale of the home pursuant to the contempt order.  Specifically, she ordered both parties to enter a six-month listing agreement with a realtor of the family court’s selection, set the home’s initial listing price at $255,550, and required the listing price to be reduced by five percent every sixty-day period the home remained unsold.  She further required the parties to accept an offer within three percent of the listing price of the property at the time of the offer and authorized both Husband and Wife to receive “any and all information pertaining to the marketing of the home and potential buyers.” Finally, she modified the equity award to Husband from 32.14% of the net proceeds not to exceed $60,191.02 to a sum certain of $60,191.02.

Wife appealed, arguing that the family court lacked authority to impose any of these new conditions.  The Court of Appeals agreed, in part, with Wife.  It held that the provisions of the divorce decree that did not award Husband post-judgment interest and awarded Husband 32.14% of the net proceeds not to exceed $60,191.02 were not clerical errors and thus the modification of these provisions impermissibly “modified the substance of the judgment reflected in the divorce decree.”

However the Court of Appeals approved the family court’s new provisions regarding the sale and marketing of the home.  Citing S.C. Code Ann. § 20-3-660(A) (Supp. 2010), it noted:

In equitably apportioning marital property, “the family court may order the public or private sale of all or any portion of the marital property upon terms it determines.” (emphasis added). Furthermore, the family court is authorized to construe and enforce contracts relating to property involved in a divorce action.  S.C. Code Ann. § 20-3-690 (Supp. 2010).  A court approved divorce settlement must be viewed in accordance with principles of equity and there is implied in every such agreement a requirement of reasonableness.  Ebert v. Ebert, 320 S.C. 331, 340, 465 S.E.2d 121, 126 (Ct. App. 1995).  When the terms of an agreement omit a necessary provision such as the time for performance, a court will imply a reasonable term.  Id.

Based on these legal principals, the Court of Appeals explained why the new marketing and pricing scheme was permissible:

Contrary to Wife’s argument, establishing the terms of the sale is well within the family court’s statutory authority.  See § 20-3-660(A) (authorizing the family court to establish terms for the sale of marital property).  In this case, Judge Cate’s order establishing a pricing scheme for the marital home merely enforced the terms of both the divorce decree and the parties’ prior agreement reflected in the order entered by Judge Segars-Andrews.  In that agreement, the parties concurred that “the house shall be sold at the highest and best price attainable . . . and upon the best terms attainable under current market conditions in a timely fashion and as soon as practicable.”  In the event the house failed to sell and they differed on how to proceed, the parties agreed to seek further guidance from the family court.  Husband sought that guidance, and Judge Cate provided it.  The pricing scheme Judge Cate established did not conflict with the minimum listing price of $225,300 set by the divorce decree and complied with the goals set out in the parties’ subsequent agreement.  In light of Wife’s failed attempt to sell the home for $274,000, a lower initial listing price with small periodic reductions is a reasonable approach to severing this remaining tie between Husband and Wife.  Accordingly, the family court did not err.

In the two unpublished appeals mentioned above, my clients were able to remain in the marital home years after they were ordered to move or sell it because the family court’s final order misaligned the parties’ incentives to sell the home.  I am currently negotiating a separation agreement in which marital real estate will need to be sold and the opposing counsel’s draft proposal misaligns, to my client’s detriment, the parties’ incentives to sell these properties.  Before my client executes the agreement it will need to be modified to remedy this issue.  Attorneys and judges who anticipate the sale of marital real estate to effectuate equitable distribution should make certain there is clarity on how the property is to be marketed and sold and insure that the agreement or order is not drafted in a manner that allows one party to profit to the other party’s detriment by any delay in the sale.

The Brown decision provides the family court bench and bar guidance that post judgment motions authorize remedies to affect the marketing and sale of marital real estate when one party’s actions are delaying the sale.

  • Paul D. Schwartz

    I always reserve jurisdiction over that issue for that reason. Very helpful Greg. I recently saw an example of this where an ex-husband was living free in such a home where there was no debt on the home. No reservation of jurisdiction in the Order. A real nightmare, some three (3) years later and no incentive to sell the home.

  • Mike

    I have been divorced since December 2011. I live in Kansas and my wife was awarded half the equity in the house. She can and has told me that she will turn down every offer we get so that she can have me who lives and pays for the house to build up as much equity that she can before it sells. I have made the past 15 payments since we were legally seperated.I want out of the house so i can start my life over. is there anything I can do??

  • Kathy

    Maybe you can answer this question for me? What are the benefits of x spouse living in marital home after divorce(with girlfriend, he pays mortgage, incurrs expense for repairs, gets the tax write-off, it’s been ordered house be listed and sold)?I know the folowing is true: value decreases to a point where he can now claim he wants to buy, gives him time to repair his credit, delays paying wife her share of equity. What am I missing?

  • I am hoping you can answer my question. I have been divorced six and a half years. My ex husband has refused to sell the martial home. In our divorce judgment, it states we are to agree upon the sale of the home. He is refusing to sell. He was ordered to pay alimony, which he only payed two months worth, also to purchase a new bed set, and a dining room set, which he has not done. I am taking him back to court asking the court to have him buy me out, since he refuses to sell the home. He just remarried a few months ago. My name is on the deed and mortgage. He was ordered to pay all bills, insurance, and upkeep on the home, until it sells, then any profit would be split 50/50. I want to know if the judge can order him to buy me out, or put the home into a receiver to sell the home. We were married for 25 years. christine.huff61@yahoo.com

  • Patti

    Family law judge in California ordered that the marital home be sold back in October of 2015 . My ex-husband currently lives in the home . In December I was notified that he has not made any payments since the original court date in October . I have taken him back to court on a contempt charge and the judge has given him until the 17th to make the payments current or the house will become mine. My question is if the house indeed becomes mine and the ex husband defaults and refuses to pay can I have him removed from the property and when the house is sold do I still split the proceeds?

    Thank you,
    Patti

  • I have been trying to sell my house in tewksbury Ma sincene 06/28/2013 I had a Special Master appointed what a mistake the exwife drive into court together the house is worth 300.000.00 no mogage sincene 1997 i got aloan for 150.000.00gave it to her not enough i offered her 10.000.00sorry not enough she wants my half to 2016 the courts suck

  • Sue Beck

    My son-in-law has lived and worked out of state for over 5 years. He has been renting a whole house and sub-renting rooms to help cover his cost. In December 2015 my son-in-law petitioned the court for relief of having to pay for two households, even though he is only renting his place. The judge granted it and ordered the sale of the marital home. The language in the petition possibly was interpreted wrong by the court? Maybe they thought the couple owned both houses as it was not presented as a rental, but that he was having to pay for two properties. We think this may have been misinterpreted by the court due to the way it was presented in the petition, but we are not sure. The sale of the home was ordered immediately and my daughter ordered to move out within 60 days. Is it legal for a judge in Texas to order the sale of the only marital home in a divorce proceeding several months before the final divorce decree or even mediation? Mediation is not until April this year 2016. My daughter is going to be out on the street before the court has heard all the evidence and delivered a final decree on division of assets and child custody. Of course she had to put the house on the market, and her lawyer says she will be in contempt of court if she does not comply and move out.

  • Patricia Barnhardt

    I actually have a question in case anyone knows anyone I can ask for some help. I had an AZ dissolution of marriage decree last year but my ex has not listed the properties for sale or shared the accounting, leases, keys, my personal property my business property and is still living in our huge home it won’t surprise me if he starts getting me to pay the mortgages too but he is making 6 figures a year selling cars on the side, IRS is waiting on 2009 and beyond tax returns and allowed me to file separately back to then but as much proof of all the things he is doing and as much as there seem to be tons of things he has or has not done, it appears that crimes are not crimes if there is no one to punish them. So I am looking for any advice from anyone as to where to search for the information I am in WI on public assistance with plenty of proof of the money I would be owed and still lucky enough to believe there is still equity and a way to collect if I can act soon. But the properties have issues and one is even rented in WI or at least a free squatter and I don’t even think the place is habitable. I cannot find proof of insurance. The loan is only on the land and the only one with authority I believe to evict would be my ex husband yet he does nothing while I live in a little mobile home an pay lot rent and one of the biggest reasons I wanted a divorce was the stuff he was asking me to do was illegal and when I said No he kept saying why not everyone else does. I now understand why. They are not punished. I have seen perjury a few times, yet nothing. I have proof he has lied in statements yet nothing. I even have emails that show his ideas of avoiding capitol gains and he has tried to undersell the properties or something while owing IRS yet nothing. I complained to my attorney and showed her proof, yet nothing. I even asked IRS where the heck they were when I felt forced to sell the first 2, yet nothing. He did not pay city rental taxes for years, yet nothing, county taxes almost took the properties yet he was left in full control of these properties with all the keys and leases and has went so far as to lie in order to have his attorney send me a cease and desist and yes I have proof it had to be a lie. Yet nothing. I proved to the judge that his attorney lied about my non response to the decree, yet nothing. He threatened me with arrest after the divorce for asking for leases and keys and access yet nothing. I spoke to the police was recommended to seek a order of protection in Maricopa superior court I was denied because I was not physically abused. Even by the courts own website I did not need to be, but it must have been an outdated judge because he was convinced if I was not physically abused yet it was obviously too early to ask. I personally take offense to this as I am a woman who has been beaten. Not by my ex husband so please no one get the wrong idea. But I was beaten very badly and I have found that authorities seem to be worthless for protection or enforcement in my personal experience. But yet I have continued to do what I consider to be the right thing and I admit I am getting sick of doing things legally while crooks get away with everything and I sit around with proof that I cannot find any authorities to care about.

  • Mags

    Can certainly somehow relate to what you are going thru, Patricia. Your entry was 6 mo ago and my hope is someone helped you. Also noticed it was at 2am – there are many nights I’m up most of the night worrying and reading too. Am helping an adult daughter who had been beaten down psychologically (narcissistic abuse). Married 6 years, he filed for dissolution last Jan after having left the home 10 months prior. He handled all the money and she trusted him to do so since she moved into his house 2 years prior to the marriage and funds were comingled since that time. She is not on the deed. Discovery is ongoing and his dissipation is becoming clearer and clearer (gambling apx $50k)(credit cards and loans ($40-60k?) and he has most definitely perjured on financial statements, including forging her name as consent for him to withdraw 50% of his Roth IRA. Whatever a step beyond livid is, I’m there. The question to which I cannot find an answer online nor have I heard directly from her attorney’s lips is whether or not the judge can force this jerk to sell his house in order to pay his debts and give her the equitable share she would have received had he not dissipated. She needs to rebuild her life, get away from him, pay her mounting lawyer fees that we thought he’d be paying. I’m not seeing justice being served.

  • Shauna Franklin

    What constitutes a Reasonable and Timely Manner v. Being Non- Compliant? What happens in the event that a Judge fails to state the duration of time a party has to comply with the Court’s Order and orders a party the exclusive and immediate possession of a marital residence. Additionally ordering the party to prepare the residence for sale.
    The residence is now paid off and there are no liens against the property. Currently we’re at 2 years and 9 months since the divorce was granted and the house still isn’t on the market yet.

  • Dan Serco

    I’m hoping someone with legal expertise can reply:

    My divorce jut became final a few days ago.

    I have been living in the marital house for the past two years since our separation… With our daughter (we are in the state of Ohio and have shared custody) . My ex moved out two years ago.

    At the time of the decree, I did not believe there was any chance that I would be able to refinance the house with additional funds to pay my ex the 50% of the equity that I would owe her.

    So it was written in the decree that the house would be sold and the Equity split equally.

    Before putting the House on the market, I decided to take one last shot at refinancing my house. I love this house and my daughter wants to stay here.

    It was approved.

    I would be able to pay my ex $20,000 at closing (The equity in the house is 40,000)

    Out of spite, vengeance, evilness…she says she is refusing to comply.

    Her name is not on the current mortgage. Only mine is.

    I can go ahead and refinance and have the check ready for her… It would be crazy for her not to accept considering that it would be significantly more for her than if we sold the house. (Max value plus no realtor fees)

    This is simply a matter of her being angry and wanting to hurt me by not allowing me to stay in the marital home.

    If she were to take me to court for contempt, would it hold up?

    Would a judge accept me refinancing the house and giving her half of the equity in place of selling the home? Or would he insist that I sell the home even though my ex would get less of a return?

    Thank you

    • You could “buy” the house when it goes on the market. You could file a rule 60 motion. If you need my help with either let me know.

  • caroline

    question:

    if couple in SC has more debt than assets and wife has not worked(married 30 years) if divorce was presented would judge force sale of house due to excessive debt and one salary . obviously wife would recve alimony but would house be foreced to be sold even if husband wants wife to stay in house. who controls sale of house and offers that come in, etc.

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