What are the legal implications of taking a joint owner’s name off the mortgage of a real estate property that is at a loss?

I purchased a home with my sister one year ago. The home cost $400K. My sister placed $40K as a down-payment. Her and I split the mortgage, utility, homeowners association fees, etc. payments equally (50/50). At present day, a fair estimate for the price of the house is $360K. I am interested in getting my name off the mortgage/deed. My sister will retain ownership of the house. As such, she will have to re-finance. Legally, do I owe my sister 50% of the initial down-payment and the ”unrealized loss’ (variance between the sales price and the appraised property value)?

Asked on May 22, 2009 under Real Estate Law, Maryland


B. B., Member, New Jersey Bar / FreeAdvice Contributing Attorney

Answered 11 years ago | Contributor

That depends on what you and your sister might have agreed on, and what she is willing to live with now.  While an unwritten agreement about real estate ordinarily isn't binding, this is your sister, and she isn't under any obligation to buy you out, either, which is what is happening here although the "price" is half the equity -- which is pretty much zero.  For more details on your rights and obligations, you should talk to a real estate attorney, who can review the unique facts of your situation.  One place to find a qualified lawyer is our website, http://attorneypages.com

I would also suggest that you talk to your tax advisor, since there may be consequences to this transaction that you will have to -- or might want to -- report on your next tax return.

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