Detailed Answer

If two or more people own real estate together and one owner wants to keep the property, the usual path is for that owner to refinance the mortgage in their own name and use the proceeds (or other funds) to buy the other owner out. Under Pennsylvania law the process combines real-estate, mortgage, and property-transfer steps. Below is a clear, step-by-step overview using a simple hypothetical:

Hypothetical facts (illustrative)

Two friends, Alice and Ben, own a house as tenants in common. The current mortgage balance is $120,000. Alice wants to remain in the house and buy Ben’s 50% interest. The house appraises at $300,000.

Step 1 — Confirm ownership type and legal obstacles

First, check the deed to confirm how you own the home (joint tenants with right of survivorship, tenants in common, etc.). Different ownership forms change some rights and procedures. If there is a written co-ownership agreement, review it for buyout terms. Also check whether any liens, judgments, or existing mortgages contain clauses (like due-on-sale) that could affect refinancing.

Step 2 — Establish the buyout price

Common approaches to set a buyout price:

• Agree on current market value using a professional appraisal.
• Agree on a formula (remaining mortgage + split equity = buyout amount).
• If you cannot agree, consider hiring a neutral appraiser or using mediation.

In the hypothetical: appraised value $300,000; mortgage $120,000. If Alice buys Ben’s half of the equity, she would pay Ben about $90,000 (half of $180,000 equity), adjusted by negotiation or credits for shared costs.

Step 3 — Decide financing method

Typical financing options:

• Refinance the existing mortgage into a new loan solely in the buying owner’s name for an amount that covers the existing mortgage payoff plus cash-out to buy out the co-owner.
• Get a new purchase-money mortgage or second mortgage while keeping the existing loan in place (less common if the seller remains on the loan).
• Pay cash to the co-owner from savings or other funds.

Lenders look at the buyer’s credit score, income, debt-to-income ratio, and the property’s appraised value. The buyer must qualify on their own for the new loan.

Step 4 — Title search and clearances

Before closing, obtain a title search and title insurance commitment. The title search reveals liens, mortgages, judgments, or other clouds on title. All existing secured lenders must be paid off or subordinated as appropriate.

Step 5 — Prepare a written buyout agreement and deed transfer

Document the terms in writing. Typical buyout documents include:

• A buyout agreement describing the price, payment method, closing date, and any prorations.
• A deed from the selling co-owner conveying their interest to the buyer (often a quitclaim or general warranty deed, depending on negotiation).
• Loan documents for the refinancing lender.

At closing, the selling co-owner signs the deed transferring their ownership interest. The buyer or settlement agent records the deed in the county recorder/registry so public records reflect the new owner.

Step 6 — Closing, payoff, and recording

At closing the refinance lender pays off the old mortgage and provides cash-out funds for the buyout. The settlement agent pays the selling co-owner the buyout amount and records the deed. The buyer becomes sole owner of record and has the new mortgage.

What if the other owner won’t cooperate?

If a co-owner refuses to sell or sign a deed, the buyer has two main paths:

• Negotiate: offer better terms, mediation, or a payment plan.
• File a partition action in Pennsylvania court to force a sale or physical division of the property. Pennsylvania law provides procedures for partition of real property; courts may order the property sold and divide proceeds among owners. For statutory guidance on real property and partition-related provisions, see Pennsylvania Consolidated Statutes, Title 68 (Real and Personal Property): Title 68 — Real and Personal Property. You may also consult local county resources and the Pennsylvania Courts website: Pennsylvania Courts.

Tax, debt, and liability considerations

Buying out a co-owner may have tax consequences (capital gains, basis adjustments) and affect who is liable on the mortgage. Removing a co-owner’s name from the deed ends their ownership interest, but removing them from the mortgage requires the lender to release them—typically by refinancing or formal loan assumption with lender approval. Consult a tax advisor about capital gains, basis, and transfer tax or recording fees that may apply.

Special situations to watch

• If ownership arises from marriage or divorce, family law rules or a property settlement may control the buyout terms.
• If the selling owner signed the original mortgage but is not removed from the loan after transfer, they may remain liable on that loan unless the lender removes them.
• If there are multiple mortgages or liens, coordinate payoff priority at closing to fully clear the title.

Timing and costs

Expect several weeks to a few months for appraisal, underwriting, title work, and closing. Costs typically include appraisal fees, lender fees, title search and insurance, recording fees, possible transfer taxes, and attorneys’ or settlement agent fees.

Helpful Hints

• Get a professional appraisal early so all parties start from the same market value figure.
• Talk with lenders about cash-out refinance limits and whether you qualify on your own before making an offer to buy out the co-owner.
• Use a written buyout agreement that explains payments, possession, and closing logistics to avoid later disputes.
• Obtain title insurance to protect against unknown title defects and to ensure the seller’s interest is properly released.
• If the co-owner refuses to cooperate, consult a Pennsylvania attorney about a partition action to understand costs, timeline, and likely outcomes.
• Confirm the seller will sign any required documents at closing and that the deed will be recorded the same day the mortgage is paid off.
• Review potential mortgage tax/transfer exemptions in your county—some transfers between co-owners may have reduced transfer taxes, but rules vary by jurisdiction.
• Check for any due-on-sale clause in the mortgage if you consider alternative transfer methods; lenders can sometimes accelerate loans when ownership changes.
• Keep a paper trail: save appraisal reports, the buyout agreement, closing statements (HUD-1/Closing Disclosure), payment records, and the recorded deed.

Where to get more help:

• Contact a Pennsylvania real estate attorney for document review and to handle complex title or litigation issues.
• Talk to lenders and a mortgage broker about refinance options and qualification.
• Consult a tax professional about capital gains and basis implications of the buyout.

Reminder: This article explains general steps under Pennsylvania practice and points to statutory resources. It is not legal advice. For a plan tailored to your facts, consult a licensed Pennsylvania attorney.