You should take all the documents and show them to your divorce attonrey and discuss the matter. This is an equitable distribution issue and you may be owed compensation for this.
I hope you found this answer helpful and if so, please let me know by clicking the "Mark as Helpful" button at the bottom of this answer. It’s easy and appreciated. You can also choose a "best answer" if you wish. This is easy to do and greatly appreciated.
* This post and all others I make on Internet are for informational purposes only. None of the information or materials I post are legal advice. Nothing I post as comments, answers, or other communications should be taken as legal advice for any individual case or situation. This information is not intended to create, and receipt or viewing of this information does not constitute, an attorney-client relationship. While I try to be accurate, I do not guarantee accuracy.
This advice is not meant to create an attorney-client relationship and is a general anwer to the question posed.
Without seeing the entire document and being able to ready it, no one on this site could possibly tell you what that provision means. If you are closing on the property, the lenders attorney is not going to deal with the issue of what you believe should come out of his share of the proceeds or yours. Do you both have real estate attorneys for the closing? Are you using the same attorney? If you are in the final stages of a divorce and your house is being sold, why hasn't your attorney dealt with this issue in the context of the divorce proceeding? Your best bet, is to have all proceeds held in escrow pending a determination as to how they will be divided between the two of you. Do not wait until you get to the closing table as purchaser and their lender have no interest in the battle between you and your spouse. All those issues should be resolved in advance of the closing.
This is not really a real estate/mortgage issue but equitable distribution in your divorce action. Anything acquired during the course of a marriage, both assets and debt, regardless of whose name they are in, are presumed to be marital and subject to equitable distribution. Thus, regardless of your obligation to the lender, if the debt was acquired during the marraige, there is a presumption that it is marital and should be shared. You say that the mortgage was used to pay off "his" debts, but if these were debts in his name but acquired during the marriage, in all likelihood those debts too are marital and subject to equitable distribution. Without more information it is impossible to give a better answer. However it is something you should definitely discuss with your divorce attorney and may be a point for negotiation. If the two of you can't agree on this issue at the time of closing, it is likely that the proceeds of the sale will be held in escrow by your or his attorney until you can agree.