What Happens at Closing During a Divorce Home Sale in New Jersey?

At a New Jersey divorce closing, both owners sign the deed and the seller's papers, often at different times or places, the mortgage and the costs are paid first, and the net proceeds are paid out or held exactly as your attorneys' written instructions say. Then the deed is recorded, the buyer gets the keys, and the house stops being something the two of you have to decide together.

I'm Dennis Mark Interdonato, a REALTOR® and Master CDRE® with The Dennis Mark Group at Keller Williams Realty Ocean Living. Closing day works like any other closing in most ways. The differences are who signs, where the money goes and how much has to be settled in writing beforehand. Here's what to expect.

Do both spouses have to be at the closing?

Not in the same room, and often not at the same time. Your attorneys and the closing agent arrange how each of you signs: separate appointments, or signing ahead. What matters is that every signature the deed and the title company need is there, and that the authority behind them is clear. If an order gives one of you authority to sign, the title company needs a copy well before closing. Read who has to sign to sell the house.

What do the sellers sign?

• The deed transferring the house to the buyer
• The seller's side of the settlement numbers. Federal rules require the settlement agent to give the seller the disclosures that apply to the seller's side no later than the day of closing (12 CFR 1026.19(f)(4)). Both of you should see the same figures.
• Payoff authorizations for the mortgage and any home equity line
• A GIT/REP form for each owner, so the deed can be recorded. The NJ Division of Taxation says married couples count as one owner, and with more than one owner each form shows that owner's percentage (NJ Division of Taxation).
• Whatever affidavits the title company requires

Who reports the sale to the IRS?

Generally, the person responsible for closing files Form 1099-S. The IRS instructions say spouses at the time of closing who owned together are treated as a single seller, with one form showing either spouse, and that if the closing agent receives an uncontested allocation of the proceeds between you, it files a form for each spouse based on that allocation (IRS Instructions for Form 1099-S). Ask your tax professional and attorneys before closing day whether to give the closing agent an allocation. Read capital gains and the home sale exclusion in a divorce.

What gets paid before either of you gets anything?

The mortgage payoff and any second loan, anything recorded against the house, the realty transfer fee the seller pays when the deed is recorded (NJ Division of Taxation), the commission set in your listing agreement, legal fees, and the tax and utility adjustments with the buyer. What's left is the net. The full list is in what comes out of the proceeds at a divorce closing.

Where does the money go?

Wherever your agreement or order says, through written instructions from your attorneys to the closing agent. It might be split at the table, or held. In Randazzo v. Randazzo, the New Jersey Supreme Court said that in many cases the proceeds of a marital asset sold before the divorce is final should be placed in escrow pending final distribution (opinion text). If your money is held after closing, the sale didn't fail. It closed, and the money is waiting on the rest of your case. Set that expectation early so nobody walks in expecting a check.

What if there's a disagreement right before closing?

It happens. A last-minute dispute over the numbers, an item in the house or who signs what. The attorneys step in; if authority is unclear, the closing can be moved, and sometimes the court has to weigh in. Read what happens between clear-to-close and closing day.

Can the closing happen if the two of you don't talk?

Yes. A judge appointed me to sell a marital home in Monmouth County where the two owners weren't allowed to speak to each other. Everything went through one channel, in writing, to both owners and both attorneys, and the home closed within five months of my appointment. Closing day needs signatures, not conversation.

What does my job look like on closing day?

I coordinate with the attorneys and the title company, send both owners the same updates, confirm the keys, remotes and codes are ready, and make sure the house is in the condition the contract promised. Nobody should learn anything new at the closing table.

And if either of you is buying next: once the marital home has closed, I can help either of you buy. While it's listed with me, I don't represent either of you in another purchase or sale, under the CDRE® Code of Ethics.

Frequently Asked Questions

Do both spouses get money at closing?

Only if your agreement or order says so. The closing agent follows your attorneys' written instructions, which may hold some or all of it.

Can the divorce delay the closing?

Yes, if authority, signatures or instructions aren't settled.

Do we have to see each other at the closing?

No. Your attorneys and the closing agent can arrange for each of you to sign separately.

What should I keep after closing?

Your copy of the settlement figures, the deed information and any 1099-S. Your tax professional will want them.

This is general information, not legal, tax or lending advice. Your attorney and tax professional have the final word on your own closing.

About the author

Dennis Mark Interdonato is a REALTOR® and Master CDRE® who leads The Dennis Mark Group at Keller Williams Realty Ocean Living in Point Pleasant, NJ, helping buyers and sellers throughout New Jersey make their next move, with Monmouth and Ocean County as home base. See how he handles home sales during a divorce.

Keep reading

• The Divorce Guide
• Start with a home value and a net-proceeds estimate
• What happens on closing day in New Jersey
• Have a question this didn't answer? Send it to Dennis Mark.