Ins and Outs of Selling Jointly Owned Property
Owning a property with others sometimes looks appealing, as buying property is a large undertaking requiring large lump sums of cash. By splitting the costs between various individuals, you can easily afford to purchase a property that could be your primary residence or investment property.
Whether it’s a husband or wife, family, partners, or investment partners, the tricky part comes when you need to sell the home. But first, let’s look at why you might co-own the property.
Why do people co-own property?
When you co-own a property, it enables everyone involved to share the financial burden that comes with owning a house.
These costs include everything from any repairs that need to be made, maintenance work, bills, and unexpected costs. Also, co-owning a house allows for the investors to diversify their assets among multiple properties instead of just focusing on one.
And, if you’re looking to get your foot into the real estate market, being able to co-own a place will allow for easier access to owning property.
So, if you’re looking at sharing the costs, getting more assets in your property portfolio, or just getting into the property market, it’s a great idea to co-own a property with others that you trust.
But, while this is a simpler method of getting in the property game, it can get very complicated when it comes time to sell your home.
How to sell a property in joint names
It’s important to understand how your joint property has been split and what type of ownership arrangements you’ve been a part of.
These arrangements can vary wildly from very simple to rather complex and nuanced. They can also be as simplistic as just a simple agreement and a handshake.
This means that depending on the contract, any agreement will affect how you sell your jointly owned property.
So, let’s explore the types of joint ownership contracts.
Types of joint ownership of Properties
Joint Tenancy
A joint tenancy contract is an agreement that two or more people own an undivided and equal share of the property. With a joint tenancy, it can be between any two people, whether they are married, living together, family, or even just random strangers.
With this type of contract, married couples do have an extra advantage. This advantage is similar to a joint tenancy with rights of survivorship (JTWROS). If one member of the married couple passes away, the other one inherits the deceased’s share of the house without any tax ramifications.
But if someone passes away and you’re not married, it gets more complicated. For unmarried couples who enter into a joint contract, if one of the owners passes away, the value of the entire property becomes part of the deceased person’s estate.
This means for the surviving owners to reclaim their legal right to the property, they will need to engage with a probate situation. And maybe call a real estate lawyer.
Joint tenancy often catches people by surprise and this leads to complex legal problems. This is why this ownership agreement is best for married couples, or couples who are written into each other’s will.
Joint Tenancy With Rights of Survivorship (JTWROS)
This is another common form of co-ownership. And is particularly popular with unmarried couples.
Unlike the regular joint tenancy, if one of the owners passes away, their share of the home is automatically transferred to the surviving owner.
One problem with a Joint Tenancy With Rights of Survivorship is that if an owner passes away, they can’t leave their share to a different heir while the other co-owners are still alive. Their share is distributed amongst the surviving owners evenly. Thus other heirs will have to wait to inherit.
Tenancy in Common
Tenancy in common is an agreement that can involve two or more individuals. But in this type of ownership, the shares of the property can be divided up into different percentages. So, one owner can one 70%, while another owns just 30% of the property.
With tenancy in common ownership, any co-owner can give their share of the property through some legal paperwork to a new owner, and when the co-owner dies, their share goes to wherever is indicated in their will. Unlike Joint Tenancy with Rights of Survivorship, which is directly passed onto the co-owners.
Community Property
Currently, there are 10 out of the 50 states that have community property laws:
Alaska
Arizona
California
Idaho
Louisiana
New Mexico
Nevada
Texas
Washington
Wisconsin
Community property ownership applies to married couples when the property is considered part of the community of their marriage and is equally owned by both parties.
If one of the partners passes away, they don’t have to leave their half of the property to the living spouse. They have the freedom to pass it on to an heir of their choice.
Now that we understand what types of co-ownerships exist let’s talk about the process of selling the home.
Selling property with multiple owners
When going into a co-ownership agreement, make sure that you have a good idea of a potential exit strategy of how you’ll sell the home.
It’ll just make the process easier. And the more you plan, the better you’ll be equipped to deal with curveball situations like if in a joint ownership property, one party wants to sell and the others don’t.
But let’s talk about the first step, hiring help.
Hire an agent
If you own a home and the others have decided to put the home on the market, or have planned a buyout, you should call in a realtor to represent you in the sale and make sure you’re maximizing your home’s value, and ensure a successful sale of the property.
Make sure that this agent is unbiased and considered neutral. So, no personal friends. Also, this individual will need to be a high performer and someone who can ensure there aren’t a hundred and one closing costs for sellers.
You want someone to sell the home fast.
But maybe everyone else wants to hold onto the property.
Buyouts and appraisals
If you have joint ownership and one person wants to cash-in, they can suggest a buyout.
The remaining owners will need to be financially able to buy this individual's share of the property. And then the owners will need to determine how much the house is valued at.
While you can agree on an amount and pay, it is best to hire an appraiser to come and do a proper evaluation.
It’ll be best to call in a few appraisers to evaluate the property.
But what if everyone’s in for the big cash out? Well, keep it civil. And keep paying your share of running costs at the property.
But selling a house with multiple owners can get a bit more complex.
Get what you’re owed
When working out what you’ll be taking home from the sale of the multi-owner home, bear in mind most sales will work on a percentage basis.
But if you own, for instance, 25% of the property, you won’t get exactly that back. Proceeds are only paid out after all closing costs, taxes, and commissions are paid.
And if this home is an inherited property, you will need to consider capital gains tax and all the expenses associated with selling a house during probate.
Make sure you’re informed about sale of multi-owner home
If a stalemate does occur around the sale of the multi-owner home, it’s always good to know your solution to the situation.
As an example, if one person wants to sell, and the majority don’t, the easiest way forward is to reach a buyout solution, if allowed by the co-ownership agreement.
But if they don’t want to, you will need to take legal action.
Everyone needs to be out the home
With inherited properties, it can be tricky to sell on if one of the co-owners is residing in the property. You will need them to leave before you can sell.
Going to court means no one is going to win. Always try to settle disputes outside the courtroom.
House Buyers of America will buy your co-owned home!
We buy houses for cash, including your jointly owned property! Our Real Estate Consultants are ready to take your call at 855-659-3289, or you can use our online form, to get started!
And if you are trying to broker peace between joint property-owning members, getting a quick cash offer could be key to bring the owners together.
As the perfect buyer for your home, we’re going to give you fair cash on that phone call within 10 minutes.
Many of our clients couldn’t believe how quick, quiet, and efficient the process was. Then again don’t take our word for it, you can ask our customers.
If you accept the offer, you will be assigned a dedicated Real Estate Consultant who will organize a time to meet all the owners at the property, including all the paperwork for everyone to sign.
House Buyers of America will handle all of the paperwork after the signing and we’ll do it quickly if everyone is ready to sign on the dotted line.
And once they’ve signed the contract, they will see the cash in their accounts in a matter of days.
House Buyers of America has been in the business of buying homes since 2001. And in that time bought thousands of homes.
Currently, House Buyers of America will buy homes in Washington DC, virginia house buyers, Maryland, and all throughout the Mid-Atlantic.
If you are looking to sell your jointly owned house or real estate property without the hassle, then we are exactly what you’re looking for!
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