Expert: Dick Dennis - 12/4/2009

Question
Hi

I actually own my home with a friend.  We bought our home about 5 years ago.  My friend now wishes to sell her half of the house and I have no idea what this entails.  The only 2 options I can think of is that I buy her half or another friend buys half.  My main question is how do I go about this?  If i get our home valued and obviously she'll get money for selling her half, what way does my mortgage increase?  I just can't get it round my head, its probably as simple answer but if you can help me in anyway it would be much appreciated.  Thank You.

Answer
You didn't say if both of you are responsible for the mortgage, Noeleen. So, I will address your problem as if you both are responsible. My guess is that it's probably true.

Since you are not familiar with real estate laws and customs, I strongly suggest you consult with a good local real estate attorney. All attorneys are NOT familiar with real estate. But you should realize that you can simply have your friend sign and record a quit-claim deed or warranty deed. A warranty deed is much better. But if she is expecting some money out of this transaction, you really should consult with a good local real estate broker who will evaluate the property for you and what price to pay for her half of the property. Obviously, it would be cumbersome to sell it to someone else who is unfamiliar to you. Now you can see why I suggested you consult a real estate attorney.

The way real estate has gone recently, the value of your property just might be less than what you paid for it five years ago. In fact, in some locations prices are now down to what they were six, seven and eight years ago. So, it is very important to evaluate the property first before you take any steps to separate your interests.

If you do not refinance the property to get your friend off the mortgage responsibility, you may have a problem later on if she moves out and she just gives you her half of the title. Another reason why you should consult with a real estate attorney.

To summarize, you need to get her off the title of the property AND the mortgage. The only way that is done is to get new financing to erase her name off the mortgage. You can, however, have her convey her half of the title to you with a quit-claim deed, if you actually do not give her any money for her interest, but I recommend a warranty deed. But she will still be responsible for her half of the mortgage. In fact, should anything happen financially to either one of you, the bank would come after the other person. And then you may have an estranged relationship because of it.

Yes, indeed, it is not so simple as you may have thought, Noeleen. A real estate attorney is your best bet. I do wish you well.

Dick Dennis
dixiedee13@aol.com