Detailed Answer

Short overview. When one owner of real property in Kentucky wants to remove a co-owner and keep the property, the common path is a buyout: the staying owner refinances the mortgage in their own name and uses the new loan proceeds (or other funds) to pay the departing owner for their share. The process combines negotiation, property valuation, lender underwriting, deed transfer, and recording. If the co-owner refuses to cooperate, the staying owner may have to pursue a court-ordered partition.

Step 1 — Clarify ownership and current loan status

Start by pulling the deed and the mortgage payoff statement. Confirm how title is held (joint tenants, tenants in common, etc.) and whether the existing mortgage has a due-on-sale clause or other restrictions. You can obtain recorded documents from the county clerk where the property sits and review recent mortgage statements to learn the current balance and liens.

Step 2 — Value the property and calculate the buyout amount

Get a current market valuation using a lender appraisal or a reputable broker price opinion. Subtract outstanding mortgages, liens, and estimated closing costs from the valuation to find the equity. The buyout amount is typically the departing owner’s share of net equity (for example, 50% if ownership is equal). Document how you calculated the number and consider getting the co-owner’s written agreement.

Step 3 — Decide on how to fund the buyout

Common funding methods:

• Refinance in one owner’s name (cash-out refinance) to pay off the existing mortgage and provide cash to the departing owner.
• One owner pays cash from savings or other financing (personal loan, HELOC).
• Sell the property and split proceeds (if buyout is impractical).

Step 4 — Talk to lenders and prepare for underwriting

If you plan to refinance alone, shop lenders early. Lenders will underwrite the new loan based on the applying owner’s credit, income, assets, debt-to-income ratio, and the property appraisal. Expect requirements such as:

• Debt-to-income ratio and minimum credit score;
• Property appraisal and title search;
• Closing costs and reserve requirements (some lenders want cash reserves after closing).

Note: a refinance will typically pay off the existing mortgage at closing. The departing owner can be paid out from the refinance proceeds or from separate funds at closing.

Step 5 — Prepare and sign transfer documents

Before or at closing, the departing owner must sign a deed transferring their interest (commonly a quitclaim or a general warranty deed depending on negotiation). The deed must be properly executed and notarized and then recorded in the county where the property sits. Recording the deed removes the departing owner from title for public-record purposes.

Step 6 — Closing and payoff

At the refinance closing, the lender disburses funds to pay off the existing mortgage(s) and, if arranged, to the departing owner as the buyout payment. The new loan secures the property in the staying owner’s name alone. Make sure the settlement statement shows the payoff to the departing owner and the mortgage payoff to the prior lender.

Step 7 — Record the new deed and get title insurance

Record the deed immediately after closing. Obtain an updated title search and, if possible, a lender or owner’s title insurance policy showing the new loan and the changed ownership. Verify that the prior owner’s name is removed from the recorded deed.

If the co-owner refuses to cooperate: partition actions

If the other owner will not agree to sell, be bought out, or sign a deed, the staying owner can file a partition action in Kentucky circuit court to force sale or division. A judicial partition can result in a physical division (rare for single-family homes) or a court-ordered sale, with proceeds divided according to ownership shares. Partition actions can be costly, take months, and produce an uncertain sale price, so they are typically a last resort. For general information about Kentucky courts and civil actions, see the Kentucky Court of Justice website: https://kycourts.gov.

Tax and secondary considerations

Tax consequences may arise for both parties. The departing owner may realize capital gains on their share; the staying owner may change mortgage interest deductibility and basis. Consult a tax professional about capital gains, basis adjustments, and any potential gift tax if you pay below fair market value. For federal tax guidance, see the IRS: https://www.irs.gov.

Kentucky-specific legal resources

For Kentucky statute research and local rules, use the Kentucky Revised Statutes and the Kentucky Court of Justice resources. The statutes and court rules are published by the Kentucky Legislature and the Kentucky courts respectively: Kentucky Revised Statutes and Kentucky Court of Justice. If you need help finding counsel, the Kentucky Bar Association has lawyer referral resources at https://kybar.org.

Typical timeline and costs (estimates)

• Appraisal: 1–3 weeks (cost $300–$700).
• Refinance underwriting & closing: 30–45 days after loan application (may be faster or longer depending on lender).
• Closing costs on a refinance: commonly 2–5% of the new loan balance (varies by lender).
• Attorney fees (if used for negotiation or closing): variable—get written estimates.
• Partition action (if required): several months to over a year; litigations costs and court fees apply.

Key takeaways: A successful buyout usually involves a clear valuation, a funding plan (often a refinance), cooperation on deeds and recording, and careful attention to lender requirements. If the co-owner will not cooperate, a partition lawsuit is an available but often expensive last resort. Always document agreements in writing and consult professionals for legal and tax implications.

Disclaimer: This article is for general informational purposes only and does not constitute legal advice. It is not a substitute for consulting a licensed attorney in Kentucky about the specific facts of your situation.

Helpful Hints

• Get an independent appraisal before proposing a buyout number to reduce disputes.
• Collect and keep copies of the deed, mortgage payoff statement, tax bills, and insurance policies.
• Shop multiple lenders — underwriting requirements and rates vary and can change whether you refinance alone.
• Ask the lender early whether they will accept a quitclaim deed or require the pay-off first; lenders generally require payoff of the existing loan at refinance closing.
• Use a written buyout agreement that spells out price, payment timing, deed type, and who pays closing costs.
• Record the deed immediately after signing to avoid title confusion.
• If discussions stall, consider mediation to avoid the time and expense of a partition lawsuit.
• Consult a Kentucky attorney for help drafting the deed and buyout agreement and for guidance on possible partition litigation.
• Talk with a tax advisor about potential capital gains, basis changes, and deductibility of mortgage interest after the transaction.