Death and Divorce and Bankruptcy, Oh, My!

Written by Joel Gerber. Posted in Closing Tips, Real Estate

Important Questions Every Listing Agent Should Ask

As you know, there are many facets to the closing process. Some you can control and some you cannot. Many of the issues you cannot control on the selling side, however, can be well managed if addressed early. By asking some basic questions up front, a listing agent is the best person to initially identify some of these issues. While a few of the questions that should be asked are personal in nature, knowing the answers will allow you to help your seller (and the closing attorney) prepare for a smooth closing.


Ask your client whether they are in bankruptcy (I know, this is a difficult question to ask). Please understand that some bankruptcies are ongoing. Just because your client filed bankruptcy three years ago doesn’t mean it’s no longer an issue. If the seller is still in bankruptcy, the closing attorney will need the bankruptcy trustee to approve the sale. Without the trustee’s approval, the home cannot be sold. If your client is in bankruptcy, contact your preferred closing attorney to seek advice as soon as possible.


If you are working with a married couple, ask them whether they have filed for divorce (I know, this is an even more difficult question to ask). If they are in the middle of a divorce, you need to treat the situation like a bankruptcy in the sense that sometimes court approval will be required to sell the home. If your clients have filed for divorce and a final order has not been issued, contact your preferred closing attorney to seek advice as soon as possible.

Deceased Owners

Prior to your first meeting with a prospective seller, research who owns the property. If you only meet with one of the sellers and you determine there is more than one seller, ask where the absent seller is. This is the time you likely will find out if one of the owners of the property is deceased. If you have an owner who is deceased, the first thing you want to find out is whether the property was owned as joint tenants with rights of survivorship. If it was you can take a deep breath as the property has transferred to the surviving owner by operation of law. An affidavit of death (with a certified copy of the death certificate) will need to be recorded at closing, but nothing further will need to occur as it relates to the deceased owner.

If the owners do not own the property as joint tenants with rights of survivorship, ask your client whether probate has been completed (or at least started). If probate has been commenced, obtain the probate attorney’s contact information and call him/her. Find out when the executor or administrator will be sworn in (this is the individual who will have the authority to transfer the property). If probate has not been commenced, contact your preferred closing attorney for a recommendation for a probate attorney (many closing attorneys also handle probate matters).

Delinquent Mortgage Payments

Ask you client whether he/she is current on his/her mortgage. Tell him/her to let you know immediately if he/she is unable to continue making those payments prior to closing. Once mortgage payments are missed, it can be challenging for a closing attorney to obtain a payoff of the mortgage in the customary manner. When a seller first stops paying his/her mortgage, lenders often transfer the matter to a different department within the bank (which can delay obtaining a payoff). At some point, the lender will transition the delinquency over to a law firm (again further delaying obtaining a payoff). Once a law firm gets involved, the property likely will be foreclosed upon in the near future and attorney’s fees and other charges are adding up.

Judgments and Liens

Ask your client whether he/she has any judgments or liens filed against him/her (i.e., HOA liens are somewhat common). If his/her answer is yes, ask for a copy of the judgment or lien (as they should have one). Once you get a copy of the judgment or lien, call your preferred closing attorney to discuss the situation. Also, make sure you ask your client whether he/she is involved in any pending litigation. If he/she is in the middle of a lawsuit, have him/her contact your preferred closing attorney to talk through the status of the litigation (to see if the lawsuit may impact the closing).

Seller is a Corporate Entity

If your seller is a corporate entity (i.e., LLC or corporation), ask your client who the members or shareholders are. If there is only one member or shareholder then things should be easy. Just ask him/her to provide you copies of the corporate documents identifying the sole member or shareholder (and send them to the closing attorney when the property goes under contract). If there is more than one member or shareholder, ask your client to provide you with the corporate documents showing who all of the members or shareholders are. Provide this information to the closing attorney as soon as possible as multiple individuals may need to sign documentation in connection with the closing.

Seller is not a Georgia resident or U.S. citizen

Ask your client whether he/she will be a Georgia resident on the day or closing. If they will not be, let the closing attorney know early on in the process. The closing attorney may need to send your client a document that will determine whether certain proceeds need to be withheld (and submitted to the Georgia Department of Revenue). Depending on the facts, your client may need some time to pull together the information to properly fill out the document.

Ask your client whether he/she is a U.S. citizen. If they are not, certain proceeds may be withheld from your client at closing. The amount of these withholdings can be quite significant. I assure you it’s not something your client wants to find out a few days before closing when he/she is reviewing the HUD for the first time. In certain instances, the non-U.S. citizen can obtain a waiver from the IRS and the closing attorney will not have to withhold anything (this is an accounting thing).

Seller mail out or power of attorney

Ask you client whether he/she will be at closing. It is helpful for the closing attorney to know this information sooner rather than later. Regarding the use of a power of attorney, please understand that the closing attorney will need to contact the seller giving the power of attorney on the day of closing. Closing attorneys are required to contact the seller to ensure he/she is alive (because a power of attorney is no longer valid if the person giving the power is deceased).


As I said at the beginning of this post, you cannot control everything. Gathering important information early on (and passing it along to the closing attorney), however, does provide your seller with the best opportunity for a successful closing.

As always, if you have any questions regarding this post or need help with anything at all, please do not hesitate to contact me anytime. at (912) 484-1996 (even nights and weekends) or email me at

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