In many instances, real estate issues will arise at the closing table long after a Dissolution of Marriage has been finalized.  This essentially places one or both of the Former Spouses in a time crunch, wherein they can lose a potential Buyer or lose a refinancing opportunity if a former Dissolution of Marriage needs to be reopened to clean up title encumbrances to the satisfaction of the Buyer or Lender.  When the Sellers and Buyers enter into a contract for the sale of real property, Lenders request title insurance.  However, even when a sale is a cash deal, the Buyers almost always request title insurance.  Title insurance is backed up by underwriters, who provide the title company or title law firm with their conditions to close.  Many title insurance underwriters won’t budge on these conditions to close, absent sufficient documents to overcome the condition. 

The following are a few of the major concerns and issues family law practitioners should be familiar with, as title insurance underwriters need to clear said condition for closing, which are associated with Dissolution of Marriage cases.  It is important to emphasize that these issues are better dealt with timely prior to closing a case, to avoid delays in closing.

Where a Judge determines Equitable Distribution in a trial or final hearing, the court will decide how to distribute any real property and any encumbrances the spouses took on during the course of the marriage and/or deemed marital property. “Marital property traditionally includes any property acquired during the marriage with marital funds as set forth in Sec.61.075(6)(a)(1), F.S., whether acquired individually by either spouse or jointly by them together.” Practitioners should ensure that the Final Judgment references the real property address and to ensure even better reference that the legal description be added onto the Final Judgment. 

When the parties, in the alternative of going to trial, settle the matter through a Marital Settlement Agreement (MSA), the Court will review the MSA and often enter a Final Judgment of Dissolution of Marriage, effectively dissolving the marriage and adopting the MSA. The Final Judgement can either incorporate the MSA by reference or the MSA can be recorded along with the Final Judgment.  However, due to the fact that it is not binding to record an MSA, many parties opt to not record so that details of the MSA are not a recorded public document.  It is important to remember that a failure to reference an MSA in a Final Judgment, leaves underwriters in the dark that one ever existed as it pertains to real property. Therefore, always make sure that the reference exists. 

When an examination of title, shows that the Former Spouses are still on title, this is normally due to a provision requiring that the parties remain on title until closing, in which they will pay the other spouse their equitable distribution portion in order to remove the Former Spouse from title. In order to properly close on the transaction, the Former Spouse will normally have to come in and sign the deed, mortgages, or any other necessary documents in order to ensure title insurance.  “Potential lien rights are eliminated through the evidence of consent from both parties in the recorded deed; however, the distribution of proceeds should be addressed by the closing agent pursuant to the terms of the unrecorded MSA and by written disbursement instructions from the Former Spouses. Similarly, to insure a refinance of the property, a mortgage signed by both Former Spouses, joined by their spouse(s) if remarried, will be required.” 

“In either it is important to set forth “adequate reliable proof evidence that the required amount was previously paid supports insuring in reliance on the deed as a release of the equitable lien created by the MSA. If the required payment is made as a part of the transaction being insured, proof of compliance with the terms of the MSA would be evidenced by the recording of a release from the non-owner spouse who received the payment.” P.2  

In the event that a Quit Claim Deed is done by the parties to demonstrate evidence of compliance with the Judgment or Order, language should be used to show clear agreement and divestment of the Former Spouse’s equitable liens.  Language that would accomplish such as an example is, “By execution of this deed, the grantor releases any right, claim or interest that could give rise to an equitable lien in the property, and warrants that the grantor has been paid in full and is not entitled to further compensation.” On the other hand, if a Final Judgment awards one spouse real property outright, then it is most, “[p]rudent to record an affidavit stating that the MSA awarded ownership to one spouse without creating any equitable interests or potential lien rights in the subject property in the other spouse.”

Due to the fact that spouses can convey prior to divorce and/or even get remarried post final judgment, it is very crucial to always include the martial status in the conveyance document. Conveyance documents may also have bullet points following the legal description, which can be used to include language which will unequivocally set forth the clear intent to divest, regardless of the current marital status. If the conveyance document, on its face does not provide sufficient evidence of divestment, then the Former Spouses may need to sign affidavits in order to cure the condition to close.  One useful bullet point in the conveyance document for example would be homestead status of the parties to show that the parties are still married but not living together in the property being conveyed. Homestead rights are assumed when the status of the parties remains married. 

Another cause for concern are foreign judgments. While a Final Judgment has jurisdiction on the person, it is long established that a foreign judgment does not have jurisdiction over real property (in rem jurisdiction). Moreover, a foreign judgment does not have, “the power directly to affect, by means of its decree, the title to real estate located in another jurisdiction.” However, a foreign judgment directing the parties to sell Florida real property is enforceable by a Florida court under the full faith and credit clause of the United States Constitution if the foreign court had personal jurisdiction over the parties. An order merely requiring a forced sale of real property and an equal distribution of property without directing the parties to sell is in effect a partition judgment and is not entitled to full faith and credit.

A foreign Judgment ordering the Sale of Florida property and proceed distribution is not insurable in Florida and requires partition of the property. This is due to the language directing the property (in rem) to be sold. On the contrary, a foreign judgment ordering the parties to sell and divide is enforceable in Florida and said judgment would be entitled to full faith and credit and enforcement in Florida, since the language directs action toward the person. 

In summary, while there are many title issues that can arise, time is not always on the good side of these highly contested matters. Where a Former Spouse causes delay due to lack of communication, resentment, or even death, the simple task of having a Former Spouse or representative sign instruments to clear title may be quite a challenge.  Additionally, once a case closes administratively, the litigant needs to reopen the matter so as to get an order for clarification if such is not clear on the Final Judgment, Martial Settlement Agreement, Affidavits, or Conveyance Documents prior to a transaction successfully taking place. 

Green Jennifer Barrow 

Blue Beth M. Kaler