Expert: Dick Dennis - 7/19/2009

Question
Hello Dick, how are you?
I have a question which I hope you will be able to answer :-)
Can I sell a half of my house?
I´m the owner of a property in tax value of $185000. I bought the house in 2007. I put 30% down payment and finance 110000. then I decided to remodeled the house and took second mortgage of 45000. I´m going thru some financial dificulties now and I tried to sell my house but with all the economical crisis going on it is really difficult to get the minimum I need. Thinking constantly of possible money and stress relese I´ve talked to my friend who is very interested in purchasing a half of my house  which he would live in with me. (the house is 2800sq.f. with finished basememnt so is got plenty of space to fit 2 families. The person interested is currently paying $700 rent + utilities. In case of this transaction he would apply for $80000 mortgage which payments would be much lower).
We do not want join account.
questions:
Can I sell him one half of my house?
If not, why? It would be such a relese for me and would help him as well.
If yes, who do I contact for further information?

Dick, thank you very much for your answer.
Thanks and have a wonderful day
Maryla, Raleigh NC

Answer
Yes you can if you are the only recorded owner of the property, Maryla. But it is not going to be as simple as writing that sentence. The tax value may not be an indication of the value of your property. You really need to get a more succinct value of it because county valuations are historically wrong in their valuations . . . most of the time.

In this economy, no bank that I am aware of will give your friend a loan for "his half" of the property. He will have to execute a mortgage payable to you for whatever it is agreed that your 50% is worth. He would then make monthly payments to you, but his mortgage to you would be a third mortgage. The two mortgages that you are obligated to pay have seniority over his obligation to you.

Plus, you will need to agree to certain remedies should certain things happen, like what would happen if he could not make payments to you, or what happens if you can't make payments to the bank? Does he have the right to make those payments? And how will he receive credit for doing so? Also, if you cannot make your payments, what kind of remedy would he have to protect his interests.

As 50% owner, what part of the house is he permitted to repair or remodel to his own tastes? What agreement will you have as to the use of the house in general? If you are really a couple with a possibility of marriage later, then what? You can see this can be very complex.

Now you know why I am telling you that you should have a local knowledgeable REAL ESTATE attorney put this agreement together for you to protect your interests and will he have an attorney to help protect his interests? Now you know why I said, "Yes . . . but." I do wish you well.

Dick Dennis
dixiedee13@aol.com