Refinancing to buy out a co-owner is a common way for one owner to take sole ownership of real property. Below is a practical, step-by-step explanation of how the process usually works in Missouri, what legal and practical issues you should expect, alternatives to refinancing, and when to get professional help.

1. Typical scenarios where a refinance buyout is used

• Divorcing spouses splitting the family home.
• Co-owners of an investment property or vacation home who want to separate ownership.
• One partner in a business or joint purchase wants to keep the property and buy the other partner out.

2. The basic idea — what “refinance and buy out” means

One owner applies for a new mortgage in their name only. If approved, the new lender pays off the existing mortgage and the refinancing owner uses loan proceeds to pay the other owner the agreed buyout amount. After closing, title is transferred (or confirmed) in the refinancing owner’s name alone and any old liens are released.

3. Step-by-step process

1. Agree on price and terms: The co-owners should agree on the buyout price. Common approaches are obtaining a professional appraisal, using recent comparable sales, or negotiating a price based on equity and outstanding debt.
2. Check mortgage and title status: Pull current mortgage statements and a title report. Note outstanding loan balance(s), second liens, tax liens, judgments, and whether any existing mortgage has a due-on-sale clause or other restrictions.
3. Decide how title will transfer: Usually the selling co-owner signs a deed (commonly a quitclaim deed or a warranty deed) transferring their interest to the buyer. The deed will be recorded in the county recorder/recorder of deeds office where the property is located.
4. Apply for refinancing: The buyer applies for a mortgage in their name. Lenders evaluate credit, income, debts (DTI), and the property appraisal. The lender may require the title to be cleared of liens before funding.
5. Address liens and payoffs: On closing, the new mortgage proceeds pay off the old mortgage(s) and any agreed amount is paid to the seller/co-owner. The prior mortgage should be released/marked satisfied in the county records.
6. Execute and record the deed: At or before closing, the seller signs a deed conveying their interest to the buyer. After closing, record the deed at the county recorder so the buyer is the sole recorded owner.
7. Update title insurance and records: Obtain updated title insurance in the new owner’s name. Confirm the previous lender’s mortgage satisfaction is recorded so there are no lingering liens.

4. Lender requirements and common obstacles

Expect the lender to:

• require evidence of market value (an appraisal);
• require the borrower to meet credit, income, and debt-to-income ratio standards;
• want clear title or insist on payoff of junior liens before funding;
• sometimes require the seller (ex‑co‑owner) to sign documents releasing liability — but many lenders will not accept that and will insist the seller remains on any existing loan until it is paid off by the refinance.

Common obstacles include insufficient equity, the refinancing owner’s inability to qualify on their own, and unresolved liens (taxes, judgments, HOA liens).

5. Alternatives to refinancing

• Assumption of mortgage: Some loans may be assumable, letting the buyer assume existing loan terms. Many mortgages are not assumable; check loan documents and lender policy.
• Seller financing / owner carryback: The departing owner takes a promissory note and deed of trust from the buyer. This avoids a bank refinance but creates a private mortgage and potential risk for both sides.
• Partition action: If co‑owners can’t agree, Missouri courts permit a partition action that can force sale or division of property. Litigation is expensive and unpredictable. For general court information see the Missouri Courts website: https://www.courts.mo.gov/.

6. Deeds, title, and recording in Missouri

To remove the seller from ownership, the seller should execute an appropriate deed transferring their interest. In many buyouts a quitclaim deed is used to transfer only the seller’s interest without warranties; sometimes a general warranty deed is used if the seller will give full ownership assurances. After closing, record the deed with the county recorder/recorder of deeds office where the property is located so the public record reflects the new ownership.

Missouri’s statutes and local county rules govern recording practices. For Missouri statutes and resources see the Missouri Revisor of Statutes: https://revisor.mo.gov/ and for statewide administrative information see the Missouri Secretary of State: https://sos.mo.gov/.

7. Taxes and other financial consequences

• Payoff and sale reporting: The sale portion of the buyout (payment to the departing owner) may trigger reporting (Form 1099-S in some cases) and potential capital gains for the seller depending on basis and sale price.
• Gift implications: If the buyout price is below fair market value, the difference could be treated as a gift and have tax consequences.
• Closing costs: Expect appraisal fees, title search and insurance, recording fees, possible transfer taxes, and lender fees.

Talk to a CPA or tax advisor about the tax effects before finalizing the transaction.

8. When to involve an attorney

Consider hiring an attorney when:

• you need a deed drafted or reviewed (quitclaim vs warranty);
• title issues, judgments, or liens appear;
• the co-owners disagree on price or terms;
• you plan seller financing or complex allocation of proceeds;
• you anticipate or face a partition lawsuit.

9. Practical checklist before you start

• Get current mortgage payoff amounts and statements.
• Obtain a market appraisal or broker price opinion.
• Check credit scores and gather income documentation for the refinancing borrower.
• Run a preliminary title search or order a title commitment.
• Agree in writing on price and timing with the co-owner.
• Consult a CPA about tax consequences.
• Contact a real estate attorney if title or legal issues exist.

Helpful Hints

• Start with a written agreement. Even a simple signed memo of understanding prevents misunderstandings later.
• Use a title company or real estate attorney to handle the closing to ensure proper recording and lien releases.
• Get a payoff statement in writing from any existing lender to avoid surprise balances at closing.
• Consider getting a fresh appraisal if market conditions have changed since price negotiation.
• Don’t rely on verbal promises—record deeds and lien releases promptly.
• If you can’t qualify to refinance alone, explore seller financing or a buyout involving a co-signed loan as interim solutions.