Selling a house during a divorce in Tennessee: who signs and what happens to the money

Everyone on the deed signs the deed. That is the short answer, and in a Tennessee divorce a second rule sits on top of it: once the complaint is filed and served, a statutory injunction restrains both spouses from transferring or disposing of marital property without the other spouse’s consent or an order of the court. So a house held by both spouses sells one of two ways during a divorce, by agreement of both, or under a court order. A judge can also order the house sold and divide the proceeds. What follows is what the Tennessee statutes say, not advice about your case, and the terms of a sale during a divorce belong in front of your attorney before you sign anything.

The injunction that arrives with the complaint

Section 36-4-106(d) puts temporary injunctions in place automatically. On the filing of a petition for divorce or legal separation, and on personal service of the complaint and summons or a waiver and acceptance of service, both parties are restrained and enjoined from transferring, assigning, borrowing against, concealing or in any way dissipating or disposing of any marital property, without the consent of the other party or an order of the court. The injunction stays in effect until the final decree of divorce or order of legal separation, dismissal of the petition, agreement of the parties, or an order modifying or dissolving it.

Two consequences follow for a sale. First, a spouse cannot sell the marital home out from under the other one while the case is pending. Second, a sale both spouses want is available: the statute names consent of the other party as an alternative to a court order. Get that consent in writing, and have your attorney confirm the form it should take in your case, because a title company will look for it.

The section also limits the injunctions to the spouses named in the petition rather than third parties, and preserves either party’s ability to ask the court for broader relief.

Who has to sign

Start with the deed rather than with the marriage. Whoever holds title has to sign the deed conveying it. If both spouses are on the deed, both sign. If one spouse holds title alone, that spouse signs, and the § 36-4-106(d) injunction still governs whether the sale can happen during the case at all when the house is marital property.

Tennessee recognizes tenancy by the entirety between spouses, and neither spouse acting alone can convey the whole estate out of it. Section 66-1-110 addresses the one move a single spouse can make: where property is held as tenants by the entirety, either spouse may by direct conveyance of that spouse’s interest vest the other spouse with title in fee simple. That is the mechanism behind the quitclaim deed one spouse signs to the other when the settlement gives the house to one of them. It moves the interest between the two of them. It is not a way to sell the house to a third party over the other spouse’s objection.

Whoever signs, § 66-22-101 requires the maker’s original signature, acknowledged according to law or proved by two subscribing witnesses, before the county register will record the instrument. A spouse who is out of state or deployed makes the logistics of that signature the long pole in the closing, so raise it with the closing agent early.

What a court order changes

Section 36-4-121 empowers the court, on the request of either party, to equitably divide, distribute or assign the marital property between the parties without regard to marital fault, in proportions the court deems just. The statute lists the factors the court weighs, including the age, health, vocational skills, employability and earning capacity of each party, the contributions each made, the value of each party’s separate property, the estate of each at the time of the marriage, the economic circumstances when the division takes effect, the tax consequences and the costs associated with a reasonably foreseeable sale of the asset, and dissipation of assets.

The same section empowers the court to effectuate its decree by divesting and reinvesting title, and where deemed necessary to order a sale of the property and order the proceeds divided between the parties. Equitable is the operative word: it means what the court considers just on those factors, not an automatic fifty-fifty split.

Note the factor about tax consequences and the costs associated with a reasonably foreseeable sale. The cost of selling is something the statute tells the court to consider, which is a reason to bring real numbers rather than a guess at the value.

How the money is usually handled

The closing agent pays from the proceeds in the ordinary order regardless of the divorce: the loan payoff first, then the liens and the closing costs, then the prorated property taxes. What is left is the net, and the divorce decides where the net goes.

Where the spouses have agreed on a split, the closing agent can be instructed to issue separate checks in those amounts. Where they have not, the common arrangement is for the net to be held, in the closing agent’s escrow account or as the court directs, until the final decree or an agreed order says how it is divided. Either way the instruction has to be in writing and in the closing agent’s hands before the closing, because it is not something to work out at the table. Your attorney drafts it.

Selling the house does not itself divide the equity. It converts the house into money that the decree divides.

Two practical details

On disclosure: § 66-5-209 exempts transfers between spouses resulting from a decree of divorce from the residential property disclosure requirement. That exemption covers a transfer between the two of you. A sale to an outside buyer is a normal sale and the disclosure rules apply to it, which our post on selling a house as-is in Tennessee covers.

On the mortgage: a divorce decree divides property between the spouses and does not rewrite the loan. A spouse who stays on the note stays liable to the lender until the loan is paid off or refinanced, whatever the decree says about who lives there. That is a question for your attorney and the lender, and it is one of the reasons couples sell instead of awarding the house to one side.

If a clean date matters more than a top price

A divorce sale has a second deadline the market does not care about: the hearing. A cash sale removes the buyer’s financing contingency and the appraisal, which are the two things that move a closing date. It nets less than a listed sale on a house that shows well and can wait. Our cash offer vs listing page compares both with the carrying months included, and what it costs to sell a house in Tennessee itemizes what comes off the top either way. If the house came through an estate as well, our post on selling an inherited house covers who can sign in that situation.

We buy for our own account and may assign the purchase contract to another buyer, disclosed in writing before you sign. We will work with both attorneys on the dates and send the proceeds wherever the order says.

This is general information, not legal or tax advice. Talk to a Tennessee attorney or CPA about your situation.