Should payments into a house’s mortgage be repaid to a tenant that moves out?

an unmarried couple bought a house with plans to maintain it and turn it into a rental property in 5 years. Both paid into the mortgage, but after a year they split. One wants to keep the house, while the one moving out wants to be repaid the investment into the mortgage. Is this proper? Shouldn’t the payments into the mortgage be considered the same as paying rent in this situation? Who owes who what?

Asked on June 25, 2009 under Real Estate Law, Pennsylvania

Answers:

J.V., Member, New Jersey Bar / FreeAdvice Contributing Attorney

Answered 11 years ago | Contributor

This situation is very common and yet there is no set rule as to how to proceed. Basically if both parties contributed funds than both parties presumably own the home (and I assume both names are on the deed). At that point if one party want to get out of the agreement they would technically be owed the equity and/or fair market value of their contribution based on the remaining individual gaining the possession of the property. With this being said each situation is handled differently depending on the market, the price paid, and the specifics of how each party wants to work with the other.

Because this is such a gray area I would advise you contact a local attorney and see how your area tends to handle this type of situation because it oftentimes differs from location to location as far as how a situation is perceived and handled. You will than be prepared to attempt to alleviate the situation based on the decision made between yourself and your attorney as to whats best for you while not leaving possible issues to arise in the future if the situation isn't handled properly at this point. Also if he name is on the deed you will want to agree on a price to have her sell her portion to you so you are the sole owner. Because it can get complicated I would suggest professional help from a local attorney. Good luck with everything and feel free to post again with additional questions or for clarification.


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