How to buy someone out of a house?

Question

my sister and i inherited a home when our father passed away. we refinanced the home to get our names on the title and pulled out some cash for some repairs. and the title is now under three of us (myself, my sister, and my husband). she owns half of the home and my husband and i have 1/3 each. after refinancing and pulling out cash, we now owe 205,000 on the home. it was appraised at about 800,000 last year during the refinance process but was purchased in 1986 by our father.

my question is, in the future, if we plan to buy out my sister's half, how do we do so? do we need to refinance? i cant think of any other way of coming up with that kind of cash or what amount would be considered as the buyout amount. i am concerned if we refinance that the payment will go up to something we cannot afford and we will end up just having to sell the place. we are in california by the way. any help would be appreciated!

Answer 1

You really need to see a real estate lawyer to make sure, but maybe the best option is for your sister to sign a quitclaim deed waiving her rights to the property.

Answer 2

Depending on how your sister is fixed financially she might accept monthly payments   That would give her a good income for the next 15 to 20 years.  While you both are in a good frame of mine is the time to discuss the possibilities.  If you cannot come to some kind of agreement, then the house would have to be sold.  Remember the longer the three of you hold onto the house the value will increase.  Would you be able to pay the taxes on a house appraised at 1 million.

Answer 3

Seek an attorney that specializes in probate type issues or even a Real Estate attorney. Don't try to save money on some discount Lawyer. Make sure to do it right. One mistake you could lose the whole thing.

Answer 4

Not enough info.  Did she pull out cash or just you.  What was owed on the home at the time you inherited it before you refinanced.  Also I assume you and your husband own 1/4 each not 1/3?  Assuming the debt against the house is shared equally, that leaves 595,000 in equity.  That means your sister owns approximately $300,000.  This would amount to roughly an additional $2000 per month on a 30 year loan (plus her share of the insurance and property taxes).  If you can't afford that or you can't come to a more favorable arrangement with your sister, you can't buy her out.



You could sell the house, give her her share and then buy a house you can afford with your share.