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.
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.
I am joint owner of 3 buy to let properties with my ex husband. He declared himself bankrupt in august 2010. I was left with managing the props. I would like to sell them for the total value of the mortgages on them £210k just to get rid of them.However in the current climate the most I would get is £150k
Can I give/sign over my half to my ex husband without me making any money from them?
newfie - 25-Aug-14 @ 11:39 AM
I am considering buying my partner out.Morgage left on the house is 125K,house worth 270K.How much will my morgage be?What other charges I will have and how much on average I'll need to prepare in cash?
aida - 30-Apr-14 @ 1:57 PM
@Lid01 If you wanted to buy out your partner the mortgage you requirewould actually be £135.5K.Based on your figures the equity in your house is £169K therefore you would have find £84.5K to give to your partner but you would still need to cover the remaining £51k still owed on the mortgage, therefore you would need a new mortgage of £135.5K.When working out the equity in the property have you accounted for any fees that would be involved if the property was to be sold? These can total a substantial amount and should be taken into account as they would be if you were actually selling and not buying out your partner.
TC - 9-Oct-12 @ 3:26 PM
Mortgage left is £51.000 but property worth about £220.000.How does it work if I wanted to buy out my partner? Is it £220.00 less £51.000 to clear the mortgage (which leaves £169.000) then I'd have to buy out half of £169.000 which leaves £84.500.Am I left with a mortgage of £169.000 or £84.500??
lid01 - 9-Oct-12 @ 9:59 AM
What happens if the buy out is signed and the deeds have been changed but the loan agreement that was signed for the equity money ( say £ 10000 per month for two years) has been breached, the party buying from then other lowers the payments or just stops paying.What can be done in that situation?