Just because it's the first time you have seen this doesn't mean it's the first time IRS has seen it.  ProSeries has a series of questions that must be answered on the Home Sale Worksheet, but none of that gets filed with the return.  For the question about whether you or your spouse lived in the home two out of the last five years, just answer Yes.  No one is going to look at the divorce decree, and it doesn't prove that the former spouse lived there anyway.  (I'm not sure what the rule would be, if it had been a rental.)

Has your client been deducting the mortgage, insurance and taxes as alimony?