Refinancing and Buying Out a Co-Owner in Nevada: A Step‑by‑Step FAQ

Quick answer: To refinance and buy out a co-owner in Nevada you (1) confirm title and lien status; (2) determine the buyout amount (share of equity); (3) choose a financing route (cash‑out refinance, new loan, assumption, HELOC, or seller financing); (4) document the deal in a written buyout agreement and transfer deed; and (5) close through escrow and record the deed and lien releases. If you cannot reach agreement, a partition action is available under Nevada law. This article explains each step, common pitfalls, and practical tips.

Disclaimer

This is educational information, not legal advice. I am not a lawyer. For legal advice about your exact situation, consult a Nevada attorney who handles real estate and finance matters.

What does “refinance and buy out the other owner” mean?

It means one co-owner obtains new financing in their own name (or otherwise pays the amount owed) so they can pay the other co-owner the fair share of the property’s equity. After payment, the buying owner takes full ownership and the selling owner signs away their ownership interest with a deed.

Step‑by‑step process

1. Confirm ownership and existing liens

Order a copy of the recorded deed and a current title report. Confirm each person’s percentage ownership and list of encumbrances (mortgages, liens). The title company or an attorney can help. The deed transfer and mortgage payoff are separate: paying off a co‑owner does not remove their name from title unless they sign a deed.

2. Value the property and calculate the buyout amount

Get a professional appraisal or a trusted broker price opinion to determine fair market value. Calculate equity: Fair market value minus outstanding liens = total equity. Multiply total equity by the selling owner’s ownership percentage to get the buyout figure.

Simple example: House value $400,000; mortgage balance $200,000 → equity = $200,000. If owners split 50/50, each share = $100,000. The buyer must come up with roughly $100,000 (plus closing costs, prorations, and possible taxes).

3. Decide how to finance the buyout

Common options:

• Cash‑out refinance: Replace the existing mortgage with a new loan in the buyer’s name large enough to pay the seller’s share and repay existing liens. Lenders will require credit, income documentation, appraisal, and they will underwrite debt‑to‑income ratios.
• New purchase/loan in sole name: The buyer applies for a mortgage as if buying the seller’s interest. The lender typically requires the seller to be paid off at closing.
• Assumption: Some loans allow assumption of the mortgage by the remaining owner, but many loans have due‑on‑sale or lender restrictions and require lender approval.
• HELOC or second loan: Use home equity line/second mortgage to raise funds for the buyout.
• Seller financing: The seller accepts a promissory note from the buyer and may retain a deed of trust until paid off. This avoids immediate lender underwriting but carries risk and needs clear written terms.
• Private loan or gift: Family loans or gifts can fund the buyout but may have tax consequences and should be documented.

Note: Qualification standards and allowable loan amounts vary by lender. If the buyer cannot qualify alone, consider bridging solutions or joint refinancing with a co‑borrower.

4. Draft a written buyout agreement and transfer documents

Put the deal in writing. The agreement should state the buyout price, payment method, contingency language (appraisal, financing), closing timeline, who pays closing costs, and how title will transfer. Typical documents at closing include a deed (quitclaim or grant deed), payoff statement(s), and possibly a promissory note and deed of trust if seller financing applies.

5. Close through escrow and record documents

Use an escrow or title company to handle closing. The escrow agent will obtain payoff figures, prorate taxes and HOA dues, disburse funds, and record the deed and lien releases with the county recorder. After recording, the buyer should update homeowner’s insurance and tax billing information.

6. Removing the seller from liability on the loan

Refinancing can remove the seller from mortgage liability if the new loan is only in the buyer’s name and the prior mortgage is paid in full. However, if the seller remains on any mortgage note, they may remain liable until the lender releases them. Obtain written confirmation from the lender that the seller is released (or ensure the prior loan is paid off and reconveyed).

7. If you cannot agree: partition action

If co‑owners cannot agree on a buyout, either owner can file a partition action in Nevada court. The court can order a division in kind or a sale with proceeds divided among owners. Nevada law governing partition procedures is available from the Nevada Revised Statutes (see Chapter 40 on partition actions): NRS Chapter 40 — Partition.

Nevada statutes and legal reference

Relevant Nevada law topics include partition (NRS Chapter 40) and recording/conveyance rules (see NRS Chapter 111 for conveyances and recording matters). For the statutory texts see:

• NRS Chapter 40 — Partition
• NRS Chapter 111 — Conveyances; recording

Common pitfalls and how to avoid them

• Assuming the deed changes automatically with a loan payoff — it does not. Obtain a signed deed from the seller and record it.
• Not getting a lender release — confirm in writing that the seller’s liability is removed from the mortgage.
• Failing to document seller financing — use a promissory note and deed of trust and record both as appropriate.
• Ignoring tax consequences — a buyout can trigger capital gains or gift tax consequences. Consult a tax professional.
• Not using escrow or title insurance — escrow reduces closing risk; title insurance protects against hidden title defects.

Hypothetical example

Maria and Andre own a house 50/50. Market value $500,000; mortgage balance $300,000 → equity $200,000; each share $100,000. Maria wants to keep the house. She applies for a cash‑out refinance in her name for $420,000 (new loan pays off the $300,000 mortgage and provides $120,000 cash to pay Andre $100,000 plus closing costs). At closing Andre signs a deed conveying his 50% interest to Maria and the title company records the deed and releases the old mortgage.

Helpful hints

• Get a written appraisal and a current title report before negotiating a price.
• Talk to multiple lenders early to learn qualifying limits (DTI, credit, loan‑to‑value) and likely costs.
• Use escrow and a title company to handle payoffs and recording to avoid mistakes.
• If seller financing, have a lawyer prepare and review the promissory note and deed of trust to protect both parties.
• Keep proof that the seller’s mortgage liability has been extinguished (payoff statement and lender confirmation).
• If negotiations stall, consult a Nevada real estate attorney about a partition action and the associated risks and costs.
• Check possible tax effects with a CPA — dates of ownership, basis, and exemptions can matter.

When to call an attorney

Hire a Nevada attorney if you face complex title issues, tax planning needs, disputed ownership percentages, unresolved liens, or the parties disagree on value or terms. An attorney will draft or review agreements, advise on liability release language, and represent you in a partition action if needed.

For more details on Nevada real estate law and statutes, visit the Nevada Legislature’s NRS pages linked above.