Detailed Answer
Short summary: When one co-owner wants to buy out the other owner of real estate in West Virginia, the usual path is (1) agree on a buyout price or get an appraisal, (2) the buying owner obtains a refinance or new mortgage in their name that pays off any existing loan and pays the selling owner the agreed buyout amount, (3) the selling owner signs a deed (often a quitclaim or warranty deed) transferring title, and (4) the deed is recorded so the lender and public records show the single owner. If the co-owners cannot agree, a court partition action may be needed.
Step-by-step process
- Confirm ownership and existing liens. Order a title search or check the county land records to see how title is held (tenants in common, joint tenancy, etc.) and whether there are mortgages, judgments, or liens that must be paid off. The county clerk or recorder’s office will show recorded deeds and liens.
- Decide price and method. Co-owners can agree on a buyout price by negotiation or by hiring a licensed appraiser. Common approaches:
- One owner pays the other the fair share amount and takes full ownership.
- Owners refinance the mortgage into a new loan in the buying owner’s name; the lender pays off the existing mortgage and can disburse proceeds to the selling owner.
- Prepare for refinance: lender requirements. The buyer will apply for a mortgage or refinance. Typical lender requirements include sufficient credit score, qualifying income, and adequate equity (loan-to-value ratio). If the property has two names on title but only one borrower on the new loan, the seller’s mortgage lien must be released or paid off at closing so the lender’s security interest covers only the new borrower.
- Clear title and obtain payoff figures. Before closing, obtain payoff statements for any existing mortgage and confirm any subordinate liens or judgments. The selling owner may need to sign a payoff authorization, and the closing agent will pay off existing loans from loan proceeds.
- Execute deed transferring the selling owner’s interest. At closing, the selling owner signs a deed (commonly a quitclaim deed or a general warranty deed) transferring their interest to the buying owner. The deed must be notarized and then recorded with the county clerk/recorder where the property is located.
- Record documents and update title insurance. The deed and mortgage are recorded to show the new ownership and lien. If a title company handled the refinance, they typically issue an updated title insurance policy to the new borrower.
- Address taxes and transfer costs. Closing costs, recording fees, possible documentary stamp taxes or transfer taxes (if any), and any capital gains or gift-tax considerations should be evaluated. Consult a tax advisor for tax consequences of the transaction.
- If no agreement: partition action. If co-owners cannot agree to a buyout or sale, either owner can file a partition action in West Virginia circuit court to force sale or division of the property. Partition actions can result in court-ordered sale with proceeds divided among owners. See the West Virginia Code for civil actions and property remedies at the WV Code website: https://www.wvlegislature.gov/WVCode/.
Key legal and practical issues in West Virginia
- Type of ownership matters. Tenancy in common and joint tenancy differ. Joint tenancy may include rights of survivorship. How title is held affects who must sign the deed and how proceeds are split.
- Mortgage vs. ownership interest. Removing a co-owner from the deed does not automatically remove that person from a mortgage. The mortgage lien remains until the lender is paid off or the co-owner is released by the lender (usually by refinance into the remaining owner’s name).
- Credit and underwriting. The buying owner must qualify for a mortgage alone unless both owners remain on the loan. Lenders consider income, credit, assets, and debt-to-income ratio.
- Recording and title insurance. Properly recording the deed protects the new owner’s title and notifies third parties of the change. Title insurance helps protect against unknown title defects.
- When the other owner resists. If the seller refuses to execute a deed after being paid or refuses a reasonable buyout, you may need a court action (specific performance or partition) to resolve the dispute.
Simple hypothetical example
Two siblings own a house as tenants in common. The house appraises at $200,000. One sibling wants to keep the house and agrees to buy out the other for $100,000. The buying sibling applies for a refinance to replace the existing mortgage with a new loan in their name for the payoff of the old loan plus $100,000 to pay the selling sibling. At closing, the selling sibling signs a deed transferring their interest; the seller receives the $100,000 and the new loan is recorded in the buyer’s name.
When to consider court intervention
If co-owners cannot reach agreement, or if one owner refuses to sign a deed after being paid, a circuit court partition action in West Virginia can force the sale or division of property. For procedural and civil action rules, consult the West Virginia Code online: https://www.wvlegislature.gov/WVCode/.
Helpful Hints
- Get a current, professional appraisal before negotiating price.
- Obtain a title search early to find liens, easements, or other encumbrances.
- Talk to multiple lenders to compare refinance terms and fees.
- Consider a short written agreement outlining buyout terms, payment timing, and who pays closing costs before applying for a loan.
- Ask the closing agent or title company to prepare and confirm exact payoffs and recording steps in advance.
- Keep records of all payments and signed documents; record the deed promptly to protect ownership rights.
- If there is any dispute, consider mediation or counsel early to avoid costly litigation.
- Consult a tax professional about possible capital gains, basis adjustments, or gift-tax issues if the buyout price is well below market.
- If you suspect an invalid signature, fraud, or undue influence, get legal advice immediately—these issues affect the validity of deeds and transfers.