Why It May Be Necessary to Buy Out a Co-Owner of Your Home
There are many reasons why it may be necessary to know how to buy out a co owner of your home. This may be the result of a long term relationship being terminated where both parties own the home. It could be from divorce, friends who purchased a home together, or removing a parent from your deed. Some property owners have had problems with credit resulting in the necessity to have a co-borrower on their home meaning that they are also a co-owner of the property.
It is also important to know that if you are buying out the co-owner of your home that they may face potential tax liabilities that are incurred as a result of the sale of the home back to you. This will be a consideration for your co-owner.
Steps to Buy Out a Co-Owner
There are several things that you must do if you are planning to buy out a co-owner. These are the steps you need to understand when you want to know how to buy out a co owner of your home.
- Obtain an appraisal - First you must obtain a property appraisal so that you will know how much you will be required to pay to the co-owner of your home. Decide beforehand who will be responsible for paying the appraiser.
- Contact your lender - Chances are, if you have a co-owner, they are also on the mortgage on your property. Some lenders will allow you to simply transfer the loan to your name (known as assuming a loan) while others may require that you go through the refinance procedure. This will mean that you may have to qualify for a new loan, and this may be challenging if you have credit issues.
- Agree on buyout amount - You and the co-owner will have to agree on the amount that they are entitled to receive. There must also be an agreement that they will forfeit any rights to the property in the event that it is sold later for an amount larger than the appraised value at the time of the agreement.
It is a good idea if you are considering how to buy out a co owner of your home that you contact a reputable real estate attorney. They can help make sure that your rights are fully protected and that all documents are in order.
Property Deed After a Buy Out
It is critical that if you have gone through all the steps that are necessary to buy out a co-owner of your home that you have taken the steps necessary to remove them from the deed. Otherwise, you may have problems if you plan to sell the home later. Your mortgage lender or a licensed real estate attorney can help you navigate the legal issues if you decide to buy out the co owner of your home.