People holding puzzle pieces, concept for buying and selling real estate as a partial owner/joint ownership

How to Buy or Sell a House When You Are a Partial Owner

This actually happens more than you might think. You find yourself in a situation where you need to sell a house, but you don’t have full ownership of the property. Or, you may be looking to purchase a property with a co-owner. Examples can include a house bought in marriage, or with a partner, friend, roommate or family member. It could be an investment property purchased with a partner or investment group. Or, it might be an inherited property that was passed onto you and others in your family. These are all common scenarios we see.

Buying or selling a house when you are only a partial owner can present some challenges, especially if all the owners aren’t on the same page. In this article, we will look at some of these situations and walk you through some of the basics of how a title is taken.

Ways of Holding Title

There are many different ways a real estate title can be held. When we talk about the term title, we are referring to the legal documentation (including the physical deed) that lists the official owner(s) of a given property. In real estate, the title shows who owns the physical property, as well as ownership and usage rights attached to that property. The title is legally transferred to the new owner(s) when the property is sold. The five most common ways to hold a title in residential real estate include:

  1. Joint Tenancy—Two or more people hold the real estate title jointly, with equal ownership rights. If one partner passes away, their rights of ownership pass to the surviving owner(s) through a legal precedent called right of survivorship.
  2. Tenancy in Common (TIC)—Two or more people hold the real estate title jointly, but can have equal or unequal shares in the property. Each owner has the right to control their percentage, meaning they can sell it or will it to others in the case of death.
  3. Tenants by Entirety (TBE)—This method can only be applied for owners who are legally married. Legally, the couple is seen as one person. Any transfer of ownership must happen together, or the surviving spouse inherits the whole property upon the other’s death.
  4. Sole Ownership—This means there is only one owner listed on the title, and thus they have full control over the ownership rights of the property.
  5. Community Property—This is another that applies only to spouses who own property together. They own (or owe) everything equally, regardless of who actually provided the money for the purchase. This ensures each spouse gets an equal division of the property in the event of divorce or death. Community property is only an option in nine states: CA, AZ, NV, LA, ID, NM, WA, TX and WI.

There are some other ways you can own all or part of a real property, including through a corporate entity, partnership or trust.

Buying a Home with Multiple Owners

The best way to avoid future complications of joint ownership is to address them during the purchase process. If you are looking to buy a house with another co-owner (or multiple other owners), it is important to figure out how the ownership situation will work. Understand the different title options above and determine which one is the best solution. Don’t just consider the purchase process, whose name is on the title/deed, and financing. Think about the long-term effects of shared ownership and the steps that would need to be taken later when it’s time to sell. It may not be an easy conversation, but it’s better to handle these issues upfront rather than finding yourself in a difficult situation down the road.

If you are already the sole owner of a property and are considering adding someone to the title (a new spouse or partner, for example), be very careful about how you go about it. Consult with a real estate attorney. Make sure you make the right decisions to help protect you (and your partner) if something should happen in the future like a divorce or death.

Selling a Home with Multiple Owners

This is where it can get tricky, unless everyone is working together with the same goal. Of course, sole ownership would give you complete control and most married couples (regardless of how their title is defined) will be selling a house together with plans of moving into another. Things may more more complicated in the case of a divorce, family inheritance, joint tenancy or tenancy in common where the different parties may have different objectives. Divorce agreements will generally work out the details of selling a house and splitting the proceeds or letting one spouse retain ownership/occupancy. Joint tenancy is usually the situation applying to an inherited property that is passed to multiple heirs. In this case, all the owners must agree to the sale in order for the title to be transferred.

Tenancy in common is perhaps the most complicated if certain parties want to retain their share and/or stay in the house. You may find it more difficult to sell just your portion of the ownership.

Having the Right Guidance

If you find yourself in one of these partial ownership situations where buying or selling a house is a bit more complex than normal, it pays to work with a seasoned real estate agent (or team) who has experience dealing with these types of transactions. Having a good real estate attorney on your side is also a smart idea to navigate any unique legal complications and negotiate an acceptable outcome with the other owners.

The Cyr Team has experience in all types of real estate transactions, and we’ve seen plenty of these joint-ownership situations. Let us help you figure out your best course of action and take the necessary steps to get your home purchased or sold. Contact us today for a no-obligation consultation.

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