If you own property with a family member, friend, or partner, your ownership journey may eventually involve parting ways. When this happens, there is sometimes conflict and disagreement over what should happen to the property. If you want to sell, but your co-owner wants to keep the house, you may find yourself in a legal struggle.
Let’s look at reasons why you may need to force a sale of your property in Texas and how to accomplish your goal.
How Do You Own the Property?
It is easy to own property jointly. You and your chosen co-owner simply sign papers at the title company when you buy together. There are three ways to own property communally in Texas:
- Community property (with or without right-of-survivorship)
- Joint Property (with or without right-of-survivorship)
- Life estate
Community Property Ownership
If you are a married couple in Texas, you automatically own the property 100% as your marriage’s community property. You can also own together with right-of-survivorship so that if one of you dies, the other inherits the property automatically. A right-of-survivorship clause means that the property passes directly to the other owner after your death.
Joint Property Ownership
If you are not married and own property with another, you own the property based on your agreement with the other owner(s). You may pay taxes based on your amount of legal ownership, and you may pay your monthly loan payment based on the amount of your legal ownership. If you have a right-of-survivorship clause, the property passes on to the other owner(s) after one owner’s death.
Life Estate Ownership
A life estate is how an older person often gives an heir an ownership interest while still living. Your attorney draws up a life estate title that passes part of property ownership to someone else. This type of joint ownership causes the original owner to no longer have exclusive rights to sell the property. They must now receive approval from their co-owner before a sale or refinance can happen.
Reasons for Forcing a Sale
Joint ownership can cause unintended consequences and complications. When owners of jointly owned property can’t agree about selling or refinancing a property or there are other problems, you can force a sale. In a partition lawsuit, the judge can order the property sold and proceeds divided among the owners.
Debts and Obligations
Any debt or obligation incurred by the other owner could affect you. If your joint owner files bankruptcy, has a tax lien, or a judgment against them, it could cause you to end up with their creditors placing a lien on the home. If you do not have a homestead exemption, creditors could seize your property to collect a debt that is not yours. Your property could end up at an auction to pay back a debt.
In this situation, you can file an injunction to fight for your rights as a property owner. In a complicated situation such as this, it is always best to contact an experienced real estate attorney who knows applicable laws and can argue your case.
Difficulty Selling or Refinancing Your Home
All joint owners must sign off on a property sale. It would be easy to disagree about whether to sell or whether an offer is acceptable. You could also dispute whether to make repairs before selling or how much remodeling is needed to get the best price.
With a refinancing, you may disagree with whether interest rates make it worth doing. You could argue about who to use for your refinance or quibble about the terms of a refinancing contract. Perhaps one of you has developed lousy credit. The other owner wants to buy you out and refinance in their own name.
There are myriad reasons why you may decide to take a co-owner to court and force a sale. Forcing a sale of the property is often expensive, and the lawsuit can be a long-drawn-out affair. If your co-owner is a family member, it may also cause unintentional emotional pain for other family members and yourself. In this case, you may want to consider whether some type of compromise may be better than filing a partition lawsuit.
Incapacitation or Incompetence
Suppose your co-owner becomes incapacitated through accident or illness. In that case, you may have to petition a court to appoint a guardian or conservator to represent their interest in the sale. If you disagree with the new guardian, you may find that a lawsuit is the best way to retain your financial interests
When you sell a home for more than you paid for it, you usually pay capital gains taxes–based on the increase in value. There could be disagreements about whether selling a house could cause additional tax payments for one or more of the other owners.
If you make an adult child co-owner but sell the property, you’re both responsible for the taxes. Your adult child may not be able to afford a tax bill based on decades of appreciation. You can also create a gift tax by sharing property jointly. If you buy and place a property in joint tenancy with an unmarried partner, the IRS will consider that to be a taxable gift to your partner. These types of unexpected tax bills can create an unhappy co-owner who may be more likely to cause disagreements in the future.
Consult an experienced attorney who specializes in estate planning to help you decide the best way to manage your property issues and meet your financial goals.
Our team at Jarrett Law can help you file any injunctions, petitions, or lawsuits based on a property deed or joint ownership issues. We understand the legal issues and complex relationships involved in joint tenancy and common property. We’ll listen to your concerns and help you develop a plan that gives you peace of mind while achieving the goals you have. Contact us today for a consultation.
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