Real Estate Q&A: Can I End Joint Ownership?
In shared ownership, one person can finance to buy the other out or sell the home and split the equity. A legal case is costly so it’s best to reach an agreement.
FORT LAUDERDALE, Fla. — Question: As a single mom, I bought a house with my son about a decade ago. We used both incomes to qualify for the mortgage and split the costs. A few years later, he began a relationship, and his significant other moved in. Eventually, I met someone, and we want to buy a house. The problem is that we can’t qualify for the loan because I have the existing mortgage on my credit. My son wants to stay put. I don’t know what to do — please help! — Mary
Answer: You have options and have several things in your favor.
First, it seems everyone is getting along and trying to work through this together. The legal system does have solutions for this quandary if you and your family cannot work through this. But, like most legal disputes, it would be expensive and time-consuming and is best avoided if possible.
That said, you will both have to make some compromises.
Over the last decade, the value of your house has increased significantly. This equity means that your son can refinance the loan, perhaps with his significant other, and use some of the equity to buy you out. This would free up your credit and help you with the down payment on your new home.
The downside is that the new loan will have a higher interest rate, making the monthly payments higher for your son. Additionally, they will have to carry the housing expenses without your help.
If your son’s income cannot support the existing house even with the help of his significant other, the other option will be to sell the existing home and split the equity. He should be able to use the funds he receives toward a more affordable home, and you can do the same with your new love.
I understand these options are not ideal, and your son will not want to pay more for the same house or downsize, but it is better than the alternative.
When a property has multiple owners and one wants out, that person can go to court and force the other to buy them out or have the property sold in a “partition” lawsuit.
Since selling the property or buying you out is inevitable, it is better to get it done yourselves, saving the distress and expense of a lawsuit just to end in the same place.
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