Detailed answer: steps to buy out your co-owners and keep the home (New Mexico)
If you currently co-own a home with your siblings and you want to keep the property for yourself, the basic path is to (1) determine each person’s legal ownership and the home’s fair market value, (2) calculate an appropriate buyout price, (3) negotiate and document the transaction, (4) take care of mortgage and title issues, and (5) record the transfer so the deed shows you as sole owner. Below is a practical, step-by-step roadmap tailored to New Mexico procedures and institutions.
1. Confirm legal ownership
Begin by checking how the siblings hold title. Most family co-ownerships are tenancy in common unless the deed says otherwise. Get a certified copy of the deed from the county clerk/recorder where the property is located and review it to confirm names, ownership shares (if listed), and any recorded liens or mortgages.
Resources: County clerk/recorder offices handle deed records and recordings.
2. Obtain a current market value (appraisal)
Hire a licensed real estate appraiser to establish the property’s fair market value. An appraisal gives a neutral number you can use to compute each owner’s share and reduces disputes about price.
3. Calculate the buyout price
Typical methods to set the buyout price:
- Pro rata share of market value: Buyout = market value × sibling’s ownership percentage (for example, 1/3 if three equal owners).
- Adjustments: subtract outstanding liens and mortgage balances or add credits for recent improvements or for one co-owner’s disproportionate mortgage/tax payments if those issues were agreed upon or can be documented.
Example: If appraised value = $300,000 and you and two siblings each own one-third, each share = $100,000. If there is a mortgage of $90,000 that stays on the title until refinancing, you must decide whether the buyout price is calculated pre- or post-mortgage payoff and account for who will pay off the loan or refinance.
4. Decide how to pay: cash, financing, or promissory note
Options:
- Pay cash to siblings and record a deed transferring their interest to you.
- Refinance the mortgage solely in your name and use proceeds to buy out siblings. Lenders will require underwriting and ability-to-pay. This is the most common path when the property has a mortgage.
- Sign a promissory note and mortgage/deed of trust in favor of the selling sibling(s) (seller financing). Document terms (interest, schedule, remedies) and record any security interest as appropriate.
Important: If there is an existing mortgage, simply transferring the deed does not remove the original loan unless the lender agrees—so check the mortgage terms and discuss refinancing with lenders early.
5. Document the transaction correctly
Typical documents you will need:
- Purchase agreement or buyout agreement describing the parties, property, price, and payment terms.
- Deed transferring sibling(s)’ interest to you (quitclaim deed is common between family members, but warranty deeds provide stronger title assurances).
- If seller financing, a promissory note and deed of trust/mortgage securing the note.
- Closing settlement statement showing credits and debits, prorations for property taxes, HOA fees, utilities, etc.
Use a title company or real estate attorney to prepare and review these papers. If you choose a quitclaim deed, understand it makes no promises about title defects; a warranty deed is safer for buyers but sellers may resist.
6. Closing and recording
At closing you’ll exchange funds and execute the deed and other transfer documents. After closing, record the deed with the county clerk/recorder’s office where the property is located to put the world on notice that you are sole owner.
7. Address tax and other practical issues
Consider income tax, gift tax, and future capital gains consequences:
- If you pay less than a sibling’s share of fair market value, the difference could be treated as a gift for federal gift-tax purposes — consult a tax advisor.
- Record the adjusted tax basis you receive through the transaction; basis matters for future capital gains when you sell.
- Prorate property taxes and HOA dues through the closing date and reflect those adjustments on the settlement statement.
8. If siblings refuse to sell: partition action is an option
If one or more co-owners refuse to sell or to accept a fair buyout offer, New Mexico law allows a co-owner to bring a partition action in district court to divide or sell the property. In many cases, courts can order a division in kind (split the property) or a sale with proceeds distributed among owners. Filing a partition lawsuit can be costly and may force a sale even if you want to keep the house, so it’s best used as a last resort.
For court procedures and forms, visit the New Mexico Courts self-help resources: https://www.nmcourts.gov/self-help/. For statutory authority and procedure overviews, see New Mexico statutes and the courts’ rules: https://www.nmlegis.gov/Laws/Statutes.
9. When to hire an attorney
Hire a real estate attorney if any of the following apply:
- There are title defects, disputes, heirs, or unclear ownership shares.
- One or more co-owners refuse to cooperate.
- You need seller financing paperwork or are refinancing under complex circumstances.
- You anticipate a partition lawsuit or need help negotiating a fair settlement.
An attorney can prepare and review documents, handle title work, and (if needed) represent you in court.
Key New Mexico resources
- New Mexico Courts self-help (forms and procedural guidance): https://www.nmcourts.gov/self-help/
- New Mexico Statutes and legislative resources: https://www.nmlegis.gov/Laws/Statutes
- County clerk/recorder (for deed copies and recording): search by county at your county’s official website (recording rules and fees vary by county).
Disclaimer: This article is for general informational purposes only and does not constitute legal advice. Laws change and every situation is different. Consult a licensed New Mexico attorney before taking action.
Helpful hints
- Get an independent appraisal early — it makes negotiations objective.
- Ask siblings for documentation of their contributions (mortgage, repairs) if you plan to give credits or adjustments.
- Talk to your mortgage lender before you promise to remove others from the loan; lenders often require refinancing.
- Use a title company or attorney to run a full title search and provide title insurance — that reduces future surprises.
- Keep clear, written records of any family agreements to avoid later disputes.
- Consider staged payments or seller financing only if you have clear, recorded security (promissory note and deed of trust) and both sides get legal advice.
- If a sibling threatens to block the transfer and you believe a sale would be unfair, ask an attorney about the likely outcome and costs of a partition action before filing.
- Record the deed promptly after closing; an unrecorded deed can leave you exposed to later clouded title claims.