What are a co-owner’s rights if they are not on the deed?

My wife and I purchased a house with my brother and his wife. Being they lived out of state at the time, we took care of everything as they asked us to. My wife and I are the only names on the deed. My brother gave $5200 for the down payment and has paid half the mortgage since purchase. Now, 3 years in, he has decided to move out and ask for his money back. We never had an agreement on what would happen if someone wanted to move. My wife and I can’t walk away being we are the names on the mortgage. I hear from family he contacted a lawyer and wants to know if he has any legal standing.

Asked on November 4, 2015 under Real Estate Law, Illinois

Answers:

SJZ, Member, New York Bar / FreeAdvice Contributing Attorney

Answered 5 years ago | Contributor

This is a complicated case: you are advised to consult with a real estate attorney. There are several ways a court could view this situation:
If the court concludes that he should have been on the deed--that it was only an error or oversight that he was not--the court can order that the deed be amended to put him on it. Then, if he is an owner and he wants out, he can  bring an action "for partition" to have a court issue an order forcing the home to be sold and the proceeds distributed among the owners (assuming you and he don't work it out).
If the court concludes he should have been owner but you knowingly kept him off the deed, you also committed a crime and could face criminal liability--in this case, you basically stole from him.
If the court concludes that he's not an owner but has been basicaly paying "rent" to live there, he's not entitled to anything back, but could give you 30 days notice to terminate his tenancy and move out and will not have to keep paying the mortgage.
If the court concludes that he is not an owner but was "renting with an option to buy"--basically, buying over time by paying the down payment and part of the mortgage--again, he can leave with notice, will not get money back, but will not have to pay the mortgage.
There are other wrinkles, too, such as if the court concludes that you and your wife violated an agreement to let him acquire ownership in the house, in which case you could face liability for breach of contract.
 
With so many issues, you need to speak with an attorney.


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