Detailed Answer

This article explains how one co-owner can refinance a property loan and use the proceeds to buy out the other owner under Colorado law. It walks through the usual steps, documents, timing, costs, and possible alternatives. This is educational information only and not legal advice.

Overview: How refinancing to buy out a co-owner usually works

Refinancing and buying out a co-owner typically means that one owner obtains new financing in their own name (or in a new ownership arrangement) that pays off the current mortgage(s) and provides cash to purchase the other owner’s ownership interest. The buyout transfers title or removes the other owner from the deed after payment is made.

Key Colorado legal resources

Colorado Revised Statutes (Title 38 — Real and Personal Property): https://leg.colorado.gov/statutes/title-38.
Colorado Division of Real Estate (DORA) — consumer and licensing information: https://dora.colorado.gov/real-estate.
Colorado Judicial Branch — self-help and foreclosure information: https://www.courts.state.co.us/Self_Help/Foreclosures/.
Colorado Revised Statutes (general search of statutes): https://leg.colorado.gov/colorado-revised-statutes.

Step-by-step process

Confirm current ownership and liens.

Start by ordering a title report or reviewing the deed at the county clerk and recorder. Determine who is on title and whether the current mortgage(s) include one or both owners. If a lender holds a lien, that lien must be paid or subordinated as part of a refinance.
Agree on buyout terms.

Co-owners should agree on a buyout price and payment method. Common approaches: (a) one owner pays cash, (b) one owner obtains a new mortgage in their name and uses the proceeds to pay the other owner, or (c) the property is sold and proceeds divided. Put the agreement in writing (a purchase agreement or settlement statement between owners).
Get a market valuation or appraisal.

To set a fair buyout number, get a professional appraisal or use a broker price opinion. The buyout amount often reflects the co-owner’s share of equity (market value minus outstanding mortgage(s) and closing costs).
Qualify for a refinance or new loan.

The owner doing the buyout applies for refinance. Lenders will evaluate credit, income, debt-to-income ratio, and the property appraisal. If the loan is approved in the buying owner’s name alone, proceeds can be used to pay the other owner.
Close the refinance and pay off existing loans.

At closing, the new loan pays off prior mortgage(s). If the buyout includes cash to the departing owner, closing documents (or a separate settlement) disburse the agreed-upon amount to them.
Transfer title and record deed.

The departing owner signs a deed (often a quitclaim or warranty deed depending on agreement and title needs) transferring their interest to the staying owner. The deed must be properly executed, notarized, and recorded in the county where the property is located. Recording the deed updates public records to show the new ownership.
Update insurance and services; confirm lien releases.

Update homeowner’s insurance, change mortgage servicing if needed, and obtain lien release/payoff statements for the paid-off loans. Keep copies of recorded deeds and closing statements.

Documents typically involved

Current deed and title report
Purchase/buyout agreement between co-owners
Mortgage payoff statements and new loan documents
Appraisal and lender disclosures
Deed transferring title (e.g., quitclaim or warranty deed)
Settlement statement / closing disclosure showing payoffs and disbursements

Costs and timeline

A typical refinance and buyout can take 30–60 days if financing proceeds smoothly. Key costs may include appraisal fees, loan origination fees, title and recording fees, closing costs, possible transfer recording fees by the county, and any taxes or professional fees. Colorado does not have a statewide real estate transfer tax, but counties have recording fees.

Common issues and how Colorado law can affect them

Mortgage in both names:

If the current mortgage names both owners, a refinance will usually be required to remove the departing owner from the loan. Lenders will want the remaining owner to qualify on their own.
Title defects or liens:

Unpaid liens, judgments, or title problems can block a clean transfer. Address issues before closing; title insurance helps protect the buyer from covered defects.
No agreement between owners:

If owners cannot agree on buyout terms, Colorado law permits a partition action in court where the court can order sale or division of property. Court can be costly and slow; see local court resources and statutes for partition remedies: https://leg.colorado.gov/colorado-revised-statutes.
Tax consequences:

A buyout can create capital gains or other tax consequences for the selling owner. Consider consulting a tax professional to understand federal and state tax effects.

Alternatives to refinancing

Private purchase: the buying owner pays the departing owner from savings or a private loan, then arranges deed transfer and (if needed) later refinances to remove the departing owner from mortgage liability.
Assumption: some lenders allow loan assumptions where the staying owner assumes the existing mortgage—check lender rules.
Sale of the property and division of proceeds.
Partition lawsuit if co-owners cannot agree.

When to consult a lawyer or other professionals

Consider getting help when:

There are title defects, liens, or judgments
Co-owners can’t reach agreement
You face complex tax questions
One owner needs to be removed from a mortgage but lender requirements are unclear
There is a potential for litigation (partition, quiet title, or breach of agreement)

Helpful Hints

Get a written buyout agreement that spells out price, timing, and who pays closing costs.
Order a title report early to reveal encumbrances or clouds on title.
Shop for lenders and compare refinance rates and fees—small differences can matter.
Get a professional appraisal or broker market analysis so buyout figures are supportable.
Have the departing owner sign a deed and a closing statement that proves payment was made before recording the deed.
Keep a complete closing packet (recorded deed, payoff statements, closing disclosure, title insurance policy).
Ask a CPA about tax impacts—selling an ownership interest may trigger capital gains reporting.
If negotiations fail, consider mediation before filing a partition lawsuit to save time and cost.

Quick checklist before you start a refinance/buyout

Confirm names on the deed and mortgage(s).
Obtain a current payoff figure from the lender(s).
Agree on buyout amount and get it in writing.
Confirm the buying owner can qualify for the new loan on their own.
Plan for closing costs and title/recording fees.

Disclaimer: This is general information about Colorado law and is not legal advice. It does not create an attorney-client relationship. For advice specific to your situation, consult a licensed Colorado attorney or a qualified real estate professional.