Question: I inherited a property together with my brother. I live far from the property, and he keeps telling me he has it sold to the tenant, but months have gone by, and nothing is happening. Can I sell my half directly to the tenant and be done with it, or does it have to be both of us? – Harold
Answer: You can sell all or a part of any interest in real estate that you own unless you are restricted by an agreement not to. This means you can transfer your half of the property, or just a portion of your half, to anyone you want to. You need to be very clear with the buyer and disclose that you only own part of the property and, of course, you cannot transfer your brother’s half.
If there is a mortgage on the property, there would be a risk that the lender would demand immediate repayment, called a “due on sale clause,” if you do this. Selling your half would not change your liability for any loan you signed for, even though you no longer own part of the house. Plus, it would be difficult for your buyer to get a new loan because he is only purchasing a half interest in the property.
But if there is no existing mortgage and your buyer does not need a bank loan, you can do this. The buyer and your brother would now own it together, with the buyer standing in your shoes with all of the same rights and responsibilities you enjoyed.
Since this ability to sell your portion is often undesirable, methods have been developed to restrict the ability of one co-owner to sell a portion. One such method is where the co-owners sign an agreement giving the other owners the “right of first refusal” if another owner wants to sell the property. This would require that each owner give the others the opportunity to purchase the property on the same terms offered to a third-party purchaser.
Another method is to title the property in a “trust” and have the trust agreement contain agreed restrictions dealing with various problems that may happen when people jointly own a house, such as when one wants to sell, the roof needs replacing, or an owner passes away.
As a practicing attorney, I speak with many people about problems that could have easily been avoided with a joint ownership agreement signed when everyone was getting along. It is always easier to prevent a problem than to fix one.
About the writer: Gary M. Singer is a Florida attorney and board-certified as an expert in real estate law by the Florida Bar. He practices real estate, business litigation and contract law from his office in Sunrise, Fla. He is the chairman of the Real Estate Section of the Broward County Bar Association and is a co-host of the weekly radio show Legal News and Review. He frequently consults on general real estate matters and trends in Florida with various companies across the nation.
© 2018 Sun Sentinel (Fort Lauderdale, Fla.), Gary M. Singer. Distributed by Tribune Content Agency, LLC.