If you own a house with someone, you may find yourself wanting out of the agreement. Joint tenancy is a money-saving way to buy houses, but buying out the tenancy can be tricky, and forcing a sale, or partition action, gets costly. Since you both own property rights, a simpler solution is for you to buy out the tenancy. Here are tips to buy out a joint tenancy.
Review the Original Deed
The original deed grants you an ownership stake, which defines how you own the residence jointly, or vesting. Vesting, or joint tenancy, is commonly between married couples. If you own the property with a non-spouse, it is called tenants in common (TIC).
Review the contract to determine, your percentage of the share, and terms of the TIC. Some TIC agreements allow the property to be sold to vested parties. This means you can refuse the sale first when the other party wants to sell.
Negotiate a Price
Get an appraisal to determine fair market value. Hire two praises and average the two appraisals together, or hire one appraiser, and split the cost. Regardless of how the appraisal is done, get it in writing.
Calculate the equity by subtracting the appraise value from the mortgage. If you each own 50%, divide this figure in half. Otherwise, make necessary adjustments for uneven percentages.
Also determine the conditions of the mortgage, if applicable. Decide whether the remaining owner will re-finance, or keep the current mortgage. Negotiate a buyout based on the equity share, and pay the co-owner the amount.
If you need to refinance as the new owner, or borrow cash from other financial institutions, request a copy of your credit report from all three major credit bureaus, as you need healthy credit to do a buyout. You are entitled to a free report once annually from each bureau. Check the reports for errors.
Make a New Deed
Draw up a new deed, which the co-owner must sign to transfer ownership. Deeds can be obtained at the local recorder's office, or they can be obtained from an attorney. Write the terms of the buyout, including the date of sale and payment method. You may prefer to compose a rough draft.
You will also need to establish a moving date for the co-owner, and file a quit claim deed. Filing the new house deed isn't legally required, but it makes the county you reside in aware of the change in ownership should issue arise.
You now own all rights to the property after the buyout. Only use partition action as a last resort. If the other party refuses to negotiate fairly, or you need documents reviewed, contact a lawyer, such as Steve Butcher Sr.