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Owning a property with other people offers clear advantages, such as sharing financial responsibilities for bills and repairs, and dividing the labor for maintenance and yard work. However, when the time comes to sell, co-ownership can introduce complications. The selling process itself is similar to a single-owner sale, but disagreements among owners about asking price, timing, or sale method can create significant hurdles. Complex situations, like selling a house during a divorce, can add even more layers of difficulty.
Find Out Exactly How the Title Is Held
Your first step in selling a house in Alabama with multiple owners is to determine precisely how the property title is held. This information is critical because the type of ownership dictates the legal rights and responsibilities of each party. You can find this information on the property’s deed. The ownership structure directly influences how the sale must be conducted, how proceeds are divided, and what happens if one owner passes away.
The two primary forms of co-ownership are “joint tenants” and “tenants in common.”
As joint tenants, all co-owners hold equal shares in the property. A key feature of this ownership type is the “right of survivorship,” meaning if one owner dies, their share automatically passes to the surviving owner(s). To sell the property, all joint tenants must unanimously agree. If one owner objects to the sale or the terms, the process halts. If a consensus cannot be reached, the other owners may need to pursue legal action to force a sale.
As tenants in common, co-owners can hold distinct and potentially unequal shares of the property (e.g., one owner has a 60% interest and the other has 40%). There is no right of survivorship; each owner can sell or bequeath their individual share to their heirs. While an individual can sell their personal stake, selling the entire property requires the agreement of all co-owners.
How to Reach an Agreement
Once you understand the ownership structure, the next step is to establish a clear plan for making decisions. For joint tenants, any decision to sell must be unanimous. Because all owners have equal rights, a single dissenting owner can prevent the sale. If communication breaks down and an agreement is impossible, a court can intervene and order a “partition sale,” where the property is sold and the proceeds are divided according to ownership shares.
If a sale agreement proves difficult, one practical solution is for one co-owner to buy out the others. This allows one party to gain full ownership while the others cash out their equity. A buyout can be a simpler and faster alternative to selling on the open market, especially when disagreements arise. It requires an agreement on the property’s value and the terms of the buyout.
When selling a property held by tenants in common, the proceeds from the sale are divided based on each person’s ownership percentage. This division is straightforward if shares are clearly defined. However, all parties must still agree on the core terms of the sale, such as the listing price and accepting an offer, to sell the property as a whole. Open communication and a written agreement outlining the sale plan are essential to prevent disputes.
Legal Issues
When you sell a house in Alabama with multiple owners, you must be prepared for potential legal complications tied to any of the co-owners. Indeed, “liens, loans and unfavorable legal judgments belonging to one seller can complicate and even derail an entire house sale for all involved.”
An individual owner’s personal debts can become a problem for the property. For example, if a co-owner has outstanding debts, creditors may place a lien on the property. Common examples include IRS tax liens, mechanic’s liens for unpaid contractor work, or liens resulting from unpaid child support or other legal judgments. These liens must be paid off before the property can be sold with a clear title.
Any liens must be settled either before the closing or with funds from the sale proceeds at closing. This payment directly reduces the total net profit that will be distributed among all the owners. If you are concerned about potential legal issues, it is wise to seek professional guidance. For help, contact a real estate professional at 251-312-5100.
The Investor Advantage
Selling a house with multiple owners is manageable but filled with potential pitfalls, from personal disputes to legal entanglements. While the core steps of selling a home remain the same, the involvement of multiple decision-makers can add layers of complexity. This is why working with an experienced Alabama homebuyer can be a significant advantage. We have experience resolving the difficult situations that co-owners face and can help you navigate the entire process smoothly.
If your goal is to sell a house in Alabama with multiple owners, contact us today at 251-312-5100.