ANSWER:  There are at least three components that must be satisfied or they can torpedo your buyer's purchase:

1.) Lender Requirements:

Spousal support, child support, and division of assets will likely need to be determined and made into a court order before a lender will underwrite a loan. Until that is done, it is impossible for a lender to assess income and debts with a pending divorce. There are also underwriting rules that affect what income a lender will consider, such as, how long child support is supposed to continue. It's a good idea to work with a CDLP (Certified Divorce Lending Professional) during these transactions since the nuances can get pretty complex. 

2.) Title Requirements

Until the divorce is final, title will likely require an Interspousal Transfer Deed signed by the non-purchasing spouse so that there is a clear relinquishment of ownership rights. In most states, assets acquired during a marriage can be marital assets - owned by both parties. Since the divorce is not final, the "out" spouse could claim a stake in the property at some point in the future. For this reason, be sure to check with title before you start working with a divorcing buyer, especially if they are in an acrimonious divorce and the out-spouse may refuse to sign anything the other one needs. 

3.) The Court

Divorce is a legal process under the jurisdiction of the court. A house is an asset, a mortgage is a debt. Does your client have the permission to acquire an asset and a debt while their case is ongoing? Are they using marital funds for their downpayment, closing costs, or proof for qualifying that they don't have permission to use? You will want to be sure they check with their attorney to ensure they won't get caught in any legal entanglements with the purchase of a house. Finding out your client is in violation of a court order isn't a fun thing to discover during a transaction!

Buying a house during a divorce is definitely possible, but be sure to do your homework and research before getting too far down the line. And if it's not time yet for your client, since you did help them dodge a bullet, they'll surely work with you when the time is right!

Check the Ilumni Institute Programs and see where you fit! For questions, please schedule a call with our Director of Training Steve Watson.