Co-ownership of a home is very common. There are many cases and situations where the property was left to one or more heirs. Joint ownership relieves owners of the financial strain of house maintenance, repair costs, and other bills.
When the owners decide to sell the house, the process may be confounded by owners who refuse to agree to the terms of sale. In the case of joint ownership, some partners may be doing better financially than others and thus may not be as eager to sell as their less liquid counterparts.
Decisions will need to be made among family members. However, with the right information, it does not need to be too difficult. Let’s look at what factors and options to consider when selling a house with shared ownership.
Sell a House with Multiple Owners
- All Homeowners Must Agree to Sell
- Tenancy in Common Issues
- Get Help from a Realtor
- What are the cost of selling the home
- Get the house appraised
- Negotiating the sale of the home
If you want to sell the house, all of the owners must agree on a number of things. When a married couple decides to sell a property, they do so in one transaction as both parties agree.
However, it may be difficult to get a group of individuals whether they are siblings or relatives to agree on an offer. If a co-owner does not wish to sell and no contract was drawn up prior to joint ownership, as is often the case with inherited properties, the house cannot be sold.
You should all be aware of how to value the house, the date of sale, and any other factors that may cause disagreements during the negotiations. For example if the property in question is an investment property, the valuation may be hard to figure out.
After negotiations and a closing date, this will make it a lot easier to agree on a price range that is acceptable to everyone. It is important to set a realistic asking price for the property.
If one party needs to sell the house quickly and is not in agreement with the others, they can file a partition lawsuit against the other co-owners. This lawsuit has the potential to force the sale of the property.
This is not recommended, however, because partition lawsuits can indeed be costly due to court fees and attorneys. Known as ”partition action”, it can take up to 2 years for an outcome. Settlement outside of court is the best choice for most people because each owner stands to profit significantly.
What is Tenancy in Common
According to Cornell Law, tenancy in common is a type of ownership in a property where there is more than one owner. There are three types and ownership can be in unequal sizes and transferred to other owners via a will
Problems with Tenancy in Common
Multiple persons can own the same property in a tenancy in common situation. You can usually have as many owners as you like under a tenants in common situation, and they don’t have to divide the investment evenly. It is likewise not necessary to be wedded to enter into tenancy in common.
If you’re considering a tenancy in common, keep in mind that you won’t always have rights of survivorship, which indicates that if one of your co-owners passes away, their portion of the property will transfer to their heirs, which could be a spouse.
This could become a difficult scenario if you end up sharing a home with someone or persons you don’t know very well.
According to Nolo, if an heir owns a property jointly with someone else, that heir generally cannot sell the property without the other owner’s agreement.
If an heir is not in agreement with the sale, they may be able to file a lawsuit to stop the sale from going through.
If you’re selling a tenancy in common property, however, it’s vital to figure out who owns what percentage of the property, who pays the bills, and any other home ownership specifics well before you put the house on the market.
Hire a Realtor
The first step is to contact a real estate agent. This process will be guided by the realtor and/or their broker, that should have a lot of real estate experience. Agents can refer owners to a lawyer, consultants, and other professionals working to ensure a successful sale..
This guarantees that the agent represents each owner equally throughout the real estate process. To make the process go more smoothly, all of the partners should decide on one agent. Sellers will need to show the property to potential buyers. You will need to pay any commissions and fees.
It is preferable for owners to prevent recommendations from friends and family because some partners may feel their interests were overlooked.
When one party feels isn’t able to express their own opinions about the house due to bias, it may cause arguments. It is important to set a realistic asking price for the property. The house must be in good condition in order to sell it.
What are the Costs of Selling the Home
Although a knowledgeable realtor can make the system of selling a home more bearable, it is still time-consuming. In their agreement, the owners should specify and document the responsibilities that must be fulfilled. The owners shouldn’t rely solely on the realtor, but should also contribute useful information.
After inspections have been conducted, and if the house is in disrepair, or requires extensive repairs, the seller should reach an agreement on how to proceed.
It would be good if all parties agree which contractors to hire, what to purchase for repairs, and how much money to spend.
When it comes to staging, the owners should all agree on how to make the house appealing to potential buyers.
The owners should declutter the house and stage it for showings. A realtor can help with this. Is the house is in great condition?
Is everything in its proper place? Would you want to live there?
A co-owner should make a decision whether to be present during showings, consult with the realtor about what will make the showings succeed, and how they can assist with the process.
Why to Get the House Appraised
In some cases, you’ll discover that not everyone agrees on the value of the property. If this is the case, have the house appraised professionally.
If you can divide the property equally, expert appraisals guarantee that the figure is objective. If each owner does not have an equitable interest in the property, professional appraisal ensures that everyone receives their fair share.
However, it is not guaranteed that a single appraisal will put all of the owners at ease and allow them to agree on a price. If one or more parties believe that the single appraisal does not favor them, they can request a separate appraisal.
They can then compare the two values, and come to an agreement. If this does not work for everybody, a judge will be called in.
When Probate Becomes an Issue
Probate is a legal process that is used to determine whether someone’s will is valid. Before selling any homes in probate, the inheritors need to go through legal process and determine their eligibility. When the previous house owner leaves a will, the process is simplified.
Selling such a home will necessitate the proper filing of documents with the court, and the sale should be approved by the court. The entire process should take 45-60 days, but it could take longer. If you hire a real estate agent, this timeline will be extended.
When you sell the property in probate, you must pay for the house’s utilities, taxes, and insurance, all of which are expensive. Following the proper channels, on the other hand, will ensure that the process is completed.
Negotiating the Home Sale
Home buyers may make an offer after touring the house. Co-owners will want to talk amongst themselves before they agree. There are things like terms and money that are important.
If the buyers make a verbal offer, be sure and record it. The recording will help to keep arguments among the c0-owners to a minimum.
Making a record of multiple offers also allows the owners to get a sense of what the value of the property is. The request’s terms and the price should be included.
Some of these terms could include if the buyer can pay all cash for the house, if a partial payment will be made before the contract is signed, and if the buyer will be dependent on third party financing to close on the home.
The terms of the transaction may also include fixtures such as lights or electrical equipment, as well as whether the house passed a termite inspection, loan approval, or home appraisal.
How the Proceeds are Split
When selling a house with shared ownership, you may need to divide the shares equally among co-owners. However, the individuals who acquired the residence do not always have equal shares. As a result, they may need to calculate the proportions that each will receive when the house is sold.
Some people believe they should receive a bigger percentage of the profits because they did not use the house regularly and thus did not cause much wear and tear.
Another person may feel obligated to a bigger proportion even though they spent more time and money on house maintenance than the others. These aspects should be discussed prior to selling the home.
If the house is sold in joint ownership, co-owners can profit from some tax breaks. These tax breaks differ depending on the specific of property being sold.
If the owners had a joint tenancy agreement, each owner must also pay the same expenditures, such as utilities, property taxes, or mortgage payments, until the sale. The amounts owed should be divided among the owners in proportion to their ownership stake in the property.
All proceeds should be reimbursed after all expenses, including closing costs, have been paid in full. Inherited properties are subject to capital gains tax, which should be factored in. Account for any costs incurred when selling a house in probate.
Remember all owners must sign the deed in order to transfer the sale of the property to the new owner.
Quick Questions Co-Owners May Have?
How can we ensure that all owners are on the same page when selling our house?
The best way to ensure that all owners are on the same page on the home sale is to have a frank discussion about everyone’s goals and expectations prior to listing the property. This will help to avoid any misunderstandings or disputes down the road.
What are the benefits of selling a house with multiple owners?
There are a few advantages of selling a home with co-owners, such as:
- A) It can help to spread the cost of selling the property between multiple people.
- B) It can help to speed up the selling process, as there will be more people working on the sale.
- C) It can provide more flexibility in the selling process, as each owner can focus on different aspects of the sale.
Regardless of whether you purchased the place as a collective or inherited it jointly, joint property ownership can be complicated compared to what married couples endure.
Know the different contractual agreements available for joint property ownership; and selecting one that benefits everyone’s interests is critical. Plan ahead of time before entering into a joint ownership agreement.
If all sides consent to sell the property, ensure that everyone is protected and receives their fair share. Take note of all the terms that can help you resolve a conflict quickly and affordably. All co-owners could perhaps discuss their responsibilities and rights.
It is critical to hire an attorney. An experienced attorney will walk you through the legal ramifications of trying to sell a jointly owned property.
They will assist co-owners in overcoming obstacles to the sale as quickly and efficiently as possible and ensuring a smooth transition.
It is important to use the services of a competent title company. The title company gathers the necessary reports for the property transfer.
Title will hold the money in escrow. They assist in the payment of all liens and the collection of assets from the buyer. Co-owners who plan to sell their estate should work with the title company to resolve any issues that may arise
Some of the challenges of selling a house with multiple owners include:
1. Difficulties in coordinating schedules for showings and open houses
2. Potentially competing interests among the owners
3. The need to reach consensus on a selling price
4. The possibility that some owners may be reluctant to sell
5. The need to divide the proceeds from the sale among the owners
The different types of ownership for a house with multiple owners would be joint tenants, tenants in common, and community property.
If all of the owners have agreed to hire a real estate agent, then you would start by making contact with the agent. It becomes trickier if there isn’t one point of contact. If you agree on price with one owner and the other owners disagree, it would be very hard to move forward with the sale.