Detailed Answer
Short answer: Under Kentucky law, a co-tenant may be able to mortgage or refinance only the undivided share they own, not your separate legal interest. But a recorded mortgage or refinancing can still create real problems: it can cloud title, expose the property to a creditor’s remedy (including a forced sale of the property or the mortgaged share), or prompt a court action that can lead to sale of the property (partition). You have several possible defenses and remedies, depending on facts such as how title is held, whether your co-tenant had authority to act, and whether a lender relied on forged or false documents.
Who owns what: tenancy types matter
When several people inherit real estate, they most commonly hold the property as tenants in common. Each co-tenant owns an undivided fractional interest (for example: 50%/50% or 1/3 each). A co-tenant generally can mortgage or transfer only that person’s undivided share. A mortgage taken by one co-tenant without the others typically does not automatically encumber the other co-tenants’ legal interests.
What a mortgage or refinance does if done without your approval
- Mortgage recorded against the title: If the lender records a mortgage, it creates a public lien that appears on title. Even if the lien technically reaches only the mortgagor’s undivided share, a recorded mortgage can make selling or refinancing the property more difficult until the cloud is cleared.
- Lender’s remedies: A lender that holds a valid mortgage on a co-tenant’s share can, in many circumstances, foreclose on that mortgaged share. Kentucky courts may allow foreclosure of the mortgagor’s interest and, if necessary, a forced sale of the whole property with proceeds divided among owners and creditors.
- Partition actions: A non-consenting co-tenant can file a partition action in Kentucky court to force either a division of the physical property (when practicable) or a sale with division of proceeds. A pending mortgage or foreclosure often figures into the court’s decision about whether to sell and how to allocate sale proceeds.
- Possible fraud or forgery: If a co-tenant forged your signature or misrepresented title to obtain a loan, you may have separate claims for fraud or grounds to seek cancellation of the mortgage and damages. Those facts can also lead to criminal prosecution.
Typical outcomes you might see
Outcomes depend on lender actions and court rulings, but common results include:
- The lender forecloses on the mortgagor’s share. Kentucky courts may order a sale of the property and distribute proceeds (after satisfying mortgages and liens) according to each owner’s interest and creditor priority.
- A co-tenant files for partition. The court orders sale of the property (often at auction) and divides net proceeds among owners and any secured creditors.
- The court cancels or limits the mortgage if it finds forgery, fraud, lack of authority, or other defects in the lender’s chain of title or reliance.
- The co-tenants negotiate a buyout: one co-tenant purchases the others’ interests or they refinance properly with all owners’ consent.
Immediate steps to protect your rights
- Confirm ownership. Obtain a copy of the recorded deed(s) and any recorded mortgage or lien from the county clerk/recorder. Public records will show who has recorded documents against the property.
- Order a title search and current title report. That identifies mortgages, liens, and any recent transfers.
- Preserve evidence. Save communications, loan documents, and any proof of fraudulent or unauthorized signatures.
- Contact the lender. Provide written notice of your ownership interest and ask for clarification about the loan and the lender’s security. The lender may have relied on false information; they may be willing to pause collection or foreclosure while the matter is investigated.
- Consider filing suit. You may have causes of action in Kentucky court including quiet title, ejectment (if applicable), cancellation of instrument (to remove a forged or unauthorized mortgage), or a declaratory judgment. You or the lender may also seek partition.
How Kentucky law and courts typically handle these disputes
Kentucky courts apply general property and equity principles: a lien that properly attaches to an owner’s interest is enforceable against that interest, but other owners can challenge actions that affect the whole property or arise from fraud. If parties cannot resolve the dispute, the usual procedural path is a civil lawsuit seeking partition, cancellation of recorded instruments, or other remedies. For more information and to review Kentucky statutes, you can consult the Kentucky Revised Statutes and the Kentucky Court system:
- Kentucky Revised Statutes (statutes and definitions): https://apps.legislature.ky.gov/law/statutes/
- Kentucky Court of Justice (court procedures and forms): https://kycourts.gov
Hypothetical example
Two siblings inherit a house as tenants in common (50/50). One sibling signs loan documents (without the other sibling’s approval) and records a home equity mortgage. The lender advances funds. If the mortgagor sibling defaults, the lender may seek foreclosure on that sibling’s interest. The non-mortgagor sibling can:
- ask the lender to produce documents showing authority and signatures;
- bring a Kentucky court action to cancel the mortgage if the signature was forged or the deed was misrepresented;
- file for partition to force a sale and protect their share of the proceeds; and/or
- negotiate to pay off or refinance the mortgage properly with all owners listed so the cloud is removed.
What to expect in a partition or foreclosure scenario
If the matter goes to court, expect factual investigation, title review, and competing claims. Kentucky courts weigh equitable considerations (for example, whether one co-tenant acted in bad faith). If the court orders sale, proceeds go first to satisfy valid mortgage liens in priority order, then to owners according to their shares.
When a lender is at risk
Lenders prefer clear title. Before making most mortgages, a good lender will require proof of authority, a title search, and often that all owners join the loan or that the loan be secured by the entire property. That is why some lenders obtain cooperation from all co-owners; absent that, the lender’s remedies may be limited to the mortgagor’s interest.
Key takeaways
- One co-tenant can usually encumber only that person’s undivided share, not the entire title held by others.
- A recorded mortgage can still cloud title and lead to foreclosure or forced sale of the property or the mortgaged interest.
- You have remedies: quiet title/cancellation, partition, or claims for fraud or rescission if there was wrongdoing.
- Act quickly: preserve records, get a title report, and consult a Kentucky attorney to protect your ownership interest.
Disclaimer: This article is for general informational purposes only and is not legal advice. It does not create an attorney-client relationship. For advice about specific facts or to start litigation in Kentucky, consult a licensed attorney in your area.
Helpful Hints
- Get a certified copy of the deed from the county clerk to confirm how title is held.
- Order a current title report from a title company to see recorded mortgages, liens, and encumbrances.
- Document and save any communications about the loan, including texts, emails, and home closing documents.
- Contact the lender in writing and request copies of the mortgage, loan application, and proof of signatures if you suspect fraud.
- Do not transfer or sell your interest without legal advice—transactions while litigation is pending can complicate your rights.
- Consider mediation or negotiation with co-tenants before suing; courts often favor settlement where feasible.
- Consult a Kentucky real estate or probate attorney quickly—statutes of limitation, foreclosure timelines, and court procedures vary.
- Learn about county recording procedures where the property sits; timely recording of your documents helps protect priority.