Buying a co-owner out of a property

Buying a co-owner out of a property

Consider the following scenario: You’ve bought or inherited a property with another person, and now that party is moving on and wants to offload their share. Whether you’re ex-partners, friends, relatives or co-beneficiaries to a will, we explain the process of buying another owner out of a jointly owned property.

What’s the property worth?

The first step to taking over ownership is to find out what the property is worth. While a real estate agent will offer a property appraisal based on their experience and recent sales, it may be worth obtaining a valuation from a licensed valuer. A professional valuation will cost around $300–$400, but the expense is worth the peace of mind, as a licensed valuer is legally responsible for the information they provide.

Sorting the financials

Buying a co-owner out of a property is not as simple as splitting the purchase 50/50 and taking over the mortgage. As the purchasing party, you’ll need to refinance the property, which means you will need a new loan. If you have a joint loan over the property, this will need to be discharged and a new loan established.

Your lender may seek its own valuation, which may incur a fee that is passed on to you. You will also need to engage a solicitor to draw up a contract of sale and prepare the transfer documents. Additional fees and charges include stamp duty and loan application fees.

If the property is not a principal place of residence, you’ll also need to factor in capital gains tax. Speak to your financial adviser to determine your financial circumstances and the best course of action.

Put it in writing

No matter how straightforward the transaction seems, it is standard practice to document relevant communications and agreements made between parties.

“You don’t want anyone coming back saying they transferred the property, but they should have got X amount extra for it,” says property lawyer, Katie Richards.

You need a mutual agreement on transfer particulars, including the property value, before completing the transaction. Documentation should include land title details, and each party’s personal and financial particulars.

Completing the paperwork

Once you have arranged finance, you will need to register the property transaction with the titles registry in your state.

When registration is complete, lodge a transfer of title to make ownership official.

Smartline can help

If you’re looking to buy a co-owner out of a property, chatting with your Smartline Adviser is a good first step. Your Adviser can negotiate a competitive deal on finance, help organise your loan documentation and work with your chosen lender to ensure a smooth transition.

Transferring a property can be involved and complicated, but working with your Smartline Adviser will give you the assurance you need to move forward with the purchase.

Share

DISCLAIMER: The information contained in this article is correct at the time of publishing and is subject to change. It is intended to be of a general nature only. It has been prepared without taking into account any person’s objectives, financial situation or needs. Before acting on this information, Smartline recommends that you consider whether it is appropriate for your circumstances. Smartline recommends that you seek independent legal, financial, and taxation advice before acting on any information in this article.