[WSBARP] What are "proceeds" on sale of real property

[Eric Nelsen]

I don't think you will find a good definition of "proceeds" that will resolve the problem. A judgment is just a lien and there is no basis for a divorce court to "super-prioritize" its payment. I think that most likely, what title is actually saying is that the judgment, which is a lien against the property, can't be released unless it's paid in full. Unless it's paid in full, the Seller can't deliver clear title to the Buyer.

But you represent the broker, so I don't think this is really your legal problem to solve--it's the problem of the Seller/judgment debtor. Broker should just insist on being paid full commission.

Escrow hopefully is already in touch with the ex-spouse judgment creditor to confirm the full amount owing under the judgment. The Seller needs to contact the ex-spouse judgment creditor, explain the situation, note that if the sale fails they get nothing, and ask if they will agree to release the judgment lien on the property in return for receipt of all net proceeds even though that won't quite pay the maintenance in full. (Release of the lien on the property would not extinguish the unpaid portion of the judgment; it just removes the encumbrance on that particular property.)

Really, the contempt language in the judgment is directed against the debtor. If the debtor tries to divert her/his net proceeds anywhere other than payment of the judgments, the court can hold the debtor in contempt. There is no realistic basis for the court to hold escrow or any third party in contempt.

If Seller wilfully lets the sale fail, I think Broker could have a claim for breach of the listing/commission agreement. (Maybe not, if the Seller makes a genuine effort to get the creditor's release, but the creditor refuses.)

I just saw Jennifer Johnson's post--I think she said it more succinctly than I did.

Sincerely,

Eric

Eric C. Nelsen
SAYRE LAW OFFICES, PLLC
1417 31st Ave South
Seattle WA  98144-3909
phone 206-625-0092
fax 206-625-9040

From: wsbarp-bounces at lists.wsbarppt.com [mailto:wsbarp-bounces at lists.wsbarppt.com] On Behalf Of Kaitlyn Jackson
Sent: Thursday, September 26, 2019 11:49 AM
To: WSBA Real Property Listserv
Subject: Re: [WSBARP] What are "proceeds" on sale of real property

Probably not this close to closing.

But I would really like to know what, if any, is the definition of "proceeds" in this context. If proceeds mean price minus costs. And costs include commission to brokers, then Title's position is incorrect.

Kaitlyn



On Thu, Sep 26, 2019 at 11:36 AM Douglas Scott <doug at rainieradvocates.com<mailto:doug at rainieradvocates.com>> wrote:
Can you get this quickly on the family law calendar and petition the court for approval of the sale and distribution to the ex?
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On Thu, Sep 26, 2019 at 11:29 AM <nestor at pplsweb.com<mailto:nestor at pplsweb.com>> wrote:
Unless there is case law to the contrary (that I have not seen) those amounts come out of the net proceeds to the Seller.


Nestor Gorfinkel, Attorney at Law
Admitted to practice law in Washington & Florida
Florida Civil-Law (International) Notary
Puget Property Legal Services
40 Lake Bellevue Drive # 100
Bellevue, WA 98005
Tel. (425) 961-0519
Fax. (888) 522-3601

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From: wsbarp-bounces at lists.wsbarppt.com<mailto:wsbarp-bounces at lists.wsbarppt.com> <wsbarp-bounces at lists.wsbarppt.com<mailto:wsbarp-bounces at lists.wsbarppt.com>> On Behalf Of Kaitlyn Jackson
Sent: Thursday, September 26, 2019 11:13 AM
To: WSBA Real Property Listserv <wsbarp at lists.wsbarppt.com<mailto:wsbarp at lists.wsbarppt.com>>
Subject: [WSBARP] What are "proceeds" on sale of real property

Brain trust -

Client is real estate broker. Broker has entered into contract with Seller. Sale of property is pending. Title discovers divorce decree judgment with the following language in favor of Seller's ex-spouse:

It is further ordered that any proceeds from the pending sale of Respondent’s home shall first be applied to his past due child support .... judgment of $$$; any remaining proceeds shall be applied to his past due spousal maintenance judgment of $$$. Failure to apply the proceeds as directed by this order shall be a basis for contempt.
I took out the amount for privacy reasons.

It is discovered that if the ex-spouse's judgment is paid out of the proceeds of the sale that not enough money will be left to pay the brokers their commission. Aren't the commissions supposed to take priority as a service rendered?

Would love to hear your thoughts.
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Kaitlyn R. Jackson | Attorney| DIMENSION LAW GROUP PLLC
130 Andover Park East, Suite 300 | Tukwila, WA 98188
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Thank you,

Kaitlyn R. Jackson | Attorney| DIMENSION LAW GROUP PLLC
130 Andover Park East, Suite 300 | Tukwila, WA 98188
t: 206.973.3500 | f: 206.577.5090| e: kaitlyn at dimensionlaw.com|<mailto:kaitlyn at dimensionlaw.com|> www.dimensionlaw.com<http://www.dimensionlaw.com/>

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