Buying out a partner, usually a legal joint owner of a property, can be a little tricky but it needn’t be an insurmountable obstacle. To ensure that you and your joint owner take care of all legal obligations, it is advisable that each of you enlist the aid of legal professionals. To avoid a conflict of interest, each joint owner should consider finding their own solicitor or other experienced legal advisor.
Agreeing to Sell
Owners who are each named on house deeds each have the same legal right to live in the home and under very few circumstances could be forced to sell the home. Unfortunately not all joint owners are happy to sell at the same time, so joint owners who find themselves at an impasse may want to consider attending mediation sessions to work through their disagreements. Once joint owners do agree to sell they will need to determine what kind of offers they will accept. Again, if both joint owners are named on a deed then they must both agree to a sale for it to legally go through. For some owners this may mean needing to go to county court for an order that either forces or postpones the sale of the home. Orders are usually only issued if it is believed that one owner is attempting to accept an inappropriate offer. However, this is not usually the norm for joint owners who are in a situation in which one owner would like to buy out the other.
Ownership Percentages
If one joint owner does want to buy out the other, both joint owners will need to be very clear about how much of the home each one does own. This strict percentage may have been worked out already in previous legal documents and it is often in line with what percentage of the deposit and/or mortgage is paid by each. If this percentage is not in dispute then determining how much the partner interested in buying out the other should pay may be as easy as determining the fair market price of the home and then figuring out what the other owner’s percentage of that price would be. Interest, fees, stamp duty and other additional costs may need to be taken into account as well.
Timeline for a Buy Out
Buying out a joint owner is not usually a quick and easy process, even if both joint owners are perfectly happy with the future sale. Usually the partner making the purchase will need to secure the lump sum required, whether by liquidating assets or securing a loan. Then the legalities of the sale must be completed and which may be – but are not guaranteed to be – as simple as signing on the dotted line. If the joint owner who is being bought out will also remain in the home as a tenant then further legal issues may arise. Contacting a solicitor before the process begins is the best way to ensure that the road ahead stays smooth for everyone.
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