Detailed Answer — How heirs can keep an inherited house in Alabama
This answer explains common legal options in Alabama when several heirs inherit a house together. It assumes the heirs hold the property as co-owners (often as tenants in common) after a death and that you want to avoid a forced sale. This is educational information only and not legal advice. For case-specific guidance, consult a probate or real estate attorney licensed in Alabama.
Step 1 — Confirm legal ownership and whether the estate has been probated
Start by confirming how title passed. If the decedent left a valid will, the executor should open probate and transfer title into the heirs’ names as described by the will. If there was no will, Alabama’s intestacy rules determine who inherits and the probate court appoints an administrator. Until probate and a clear transfer are complete, nobody may have marketable title to sell or transfer. Check the county probate court where the decedent lived to see whether probate has been opened.
Step 2 — Understand the default legal situation: co-ownership and partition
When multiple heirs own the same parcel, Alabama treats them as co-owners. Each co-owner normally has an undivided share in the whole property and can possess the entire property, subject to the rights of the other owners. If the co-owners cannot agree on what to do, any co-owner may file a partition action in the appropriate Alabama court. A partition action asks the court either to divide the property physically among owners (partition in kind) or to sell the property and divide the proceeds (partition by sale).
Courts generally prefer a physical division when it is practical and fair. When a fair physical division is impossible (for example, a single-family home on one lot), courts are likely to order a sale and division of sale proceeds. Because a court-ordered sale may result in a forced sale at auction or a court-supervised sale, heirs who want to keep the house should act proactively to reach an agreement instead of waiting for partition litigation.
Common paths to keep the house
All of the following assume you have clear title (probate complete or title transferred):
- Agreement and buyout. One or more heirs can buy out the other heirs’ ownership shares. Typical steps: obtain a professional appraisal; calculate each heir’s share of equity (market value minus mortgage and costs); have the buying heir pay or refinance to purchase the other shares; document the transaction with a purchase agreement and a deed (often a quitclaim or warranty deed) and record the deed in the county land records.
- Refinance the mortgage into one heir’s name. If the property has a mortgage and one heir qualifies financially, that heir can refinance the loan, pay off the existing mortgage, and use the refinance proceeds or cash to buy out the others. This also removes co-owners’ liability on the mortgage.
- Enter a tenancy agreement among heirs (co-ownership management). Heirs can agree to keep the property and use it as rental property or occupy it with a written agreement. The agreement should cover expenses, repairs, tax treatment, rental income sharing, and exit terms if someone wants to leave. Put the agreement in writing and record financial contributions and distributions.
- Quitclaim or deed transfers by agreement. Heirs can transfer title among themselves by deed. This is common after a buyout. Use a lawyer or title company to ensure the deed language, title insurance needs, and recording are handled correctly.
- Sell tax basis planning and finance considerations. If keeping the house is meant to avoid immediate sale taxes or capital gains, consult both an attorney and a tax advisor. A buyout may have capital gains implications for selling heirs. A continuing co-ownership arrangement may affect property tax assessments and homestead exemptions.
When a court can force a sale
If co-owners cannot reach agreement, any co-owner may file a partition lawsuit. If the court finds the property cannot be fairly divided into separate parcels, the court typically orders a sale and divides the net proceeds among co-owners according to their ownership shares. Because partition outcomes are often final and expensive, courts encourage settlements and will consider whether a physical division is feasible before ordering sale.
Practical example (hypothetical)
Three siblings inherit a house worth $300,000 with a $60,000 mortgage. Each inherits one-third. Equity = $240,000, so each one’s share equals $80,000. If one sibling wants to keep the house, they can: (a) refinance the mortgage and borrow $80,000 (plus closing costs) to pay each sibling; or (b) use cash to pay $80,000 to each sibling and take title. Appraisals, written agreements, and clear recordation of deeds are essential.
Where to look in Alabama law
Alabama statutes and court rules govern probate, co-ownership, and partition procedure. You can review the Code of Alabama and search for sections on probate, intestate succession, and partition on the Alabama Legislature website: https://www.legislature.state.al.us/. For local procedure and filing requirements, check the probate or circuit court in the county where the property is located.
When to hire an attorney
Consider hiring a probate or real estate attorney if:
- Heirs cannot agree on a solution;
- There are unresolved liens, unpaid taxes, or mortgages;
- Title is unclear or the probate estate is contested;
- You need help drafting a buyout agreement, deed, or co-ownership agreement; or
- You want to avoid a partition lawsuit or to respond to one.
An attorney can prepare agreements, handle deed transfers, represent you in a partition action, and coordinate with lenders and tax advisers.
Disclaimer: This is general information and is not legal advice. It does not create an attorney-client relationship. Laws change and facts matter—consult a licensed Alabama attorney for advice about your specific situation.
Helpful Hints
- Gather key documents first: death certificate, will (if any), recent deed, mortgage statement, property tax bills, homeowner insurance policy, and a recent appraisal or estimate of value.
- Get a professional appraisal before negotiating a buyout. Relying on informal estimates increases the chance of disputes.
- Put any agreement in writing. Verbal agreements among heirs are hard to enforce.
- Consider mediation. A neutral mediator can help heirs reach a buyout or long-term co-ownership arrangement and avoid the costs of litigation.
- Keep careful records of payments and improvements. Contributions toward mortgage, taxes, and repairs affect equitable claims among co-owners.
- Check for homestead allowances and funeral allowances through probate that could affect estate assets—your probate attorney can identify relevant Alabama statutes and help protect certain family rights.
- If a buyout requires cash you don’t have, explore lender options (refinance, home equity loan) or structured buyouts where payments occur over time and are secured by a lien or promissory note.
- If you face a partition lawsuit, act promptly. Missing court deadlines can hurt your position.