Removing Your Name from a Deed after Buying Property with a Co-Borrower

There are numerous situations where co-borrowers might find themselves in a sticky legal situation, such as when one roommate buys and remolds an old house, only to ask a family member to co-sign a deed due to poor credit. This article delves into the complexities of removing a name from a property deed and the steps one can take to address this issue.

Understanding the Legal Implications

In the scenario where one roommate has poor credit and asks your son to co-sign a deed, the primary issue is that once a name is placed on a property deed, it can be challenging to remove it. This is especially true if that name is also a co-borrower on the mortgage.

Why This Is Problematic:

Removing one’s name from a deed may require the lender's consent, which is unlikely due to the financial risk involved. To remove oneself from the loan, the debt would need to be repaid, which the roommate cannot afford.

In such a scenario, legal advice should be sought. Real estate attorneys specialize in resolving such disputes and can provide tailored advice based on the specific laws of the state or province where the property is located.

Tips and Considerations

Consult a Real Estate Lawyer

The first step any co-borrower should take when faced with this situation is to consult with a real estate lawyer. A lawyer can provide comprehensive advice on the legal options available and potential next steps. It is crucial to seek professional legal counsel rather than relying on online advice.

Role of Co-Mortgage Responsibility

If your son signed on as a co-mortgagor, he is legally responsible for the repayment of the mortgage. If he no longer wants to be on the loan, the other owner will need to either:

Refinance the property and remove your son's name from the loan. Purchase him out and assume the responsibility of the mortgage entirely.

Both options are unconventional and require significant negotiation and possibly financial resources.

Alternative Solutions

Given the complexity of the situation, here are a few alternative solutions to consider:

Refinancing: If the owner decides to sell the property, a refinance might be a viable option. The owner could use the proceeds to buy out the co-borrower and then refinance the property under their own name. New Lease Agreement: If the property is being rented out, your son should contact the landlord and request to have his name removed from the rental agreement. Alternatively, he can seek a new lease agreement that reflects his individual tenancy. Individual Rental Applications: Ideally, each roommate should have applied to the landlord individually and paid directly. This would have mitigated the legal complexities of one co-signer's involvement.

Conclusion

Removing one's name from a property deed or mortgage is a complex and often legally challenging process. It is vital to approach the situation with due diligence and seek professional legal advice. Whether through refinancing, buying out the co-borrower, or negotiating a new lease, the right steps can help alleviate the legal and financial burdens associated with such situations.