How to Buy Out Siblings’ Interests in a Co-Owned Home — Alaska Guide

Detailed answer — practical steps under Alaska law

Short answer: confirm how title is held, get a current market value, negotiate a buyout price and payment terms, put the agreement in writing, complete a deed transfer at closing, and record the deed. If you cannot reach agreement, a partition action in court can force a sale or division of the property.

1. Confirm ownership and each person’s legal interest

First, pull the deed and title from the recorder’s office where the property is recorded (usually the borough or municipal recorder). The deed will show how the owners hold title (for example, “tenants in common” or as “joint tenants”). Unless a deed specifically creates joint tenancy with right of survivorship, co-owners are usually treated as tenants in common, meaning each owner holds a separate share that they can sell or transfer.

2. Determine each owner’s share and the mortgage status

• Look for language in the deed that identifies ownership percentages. If none, shares are often presumed equal.
• Check for any mortgages or liens that must be paid at closing. A lender may need to approve any refinance or new mortgage used to fund the buyout.

3. Get an accurate market value

Hire a licensed appraiser or obtain a broker price opinion to set a fair market value. Agreeing on a neutral appraisal or using two independent appraisals can avoid disputes. The buyout amount will usually be each co-owner’s market share (market value × ownership percentage), adjusted for liens and agreed credits for repairs, taxes, or unpaid contributions.

4. Negotiate buyout terms

Common buyout structures:

• Lump-sum cash payment at closing.
• Refinance: one owner refinances the mortgage in their own name and uses proceeds to pay out siblings.
• Seller-financing or promissory note: the retaining owner signs a note to pay the siblings over time; consider security (a mortgage or deed of trust) to protect sellers.

Negotiate who pays closing costs, title insurance, prorated taxes and utilities, and whether any siblings get credit for prior payments or improvements.

5. Put the agreement in writing and use proper documents at closing

Document the agreement with clear terms: purchase price, payment schedule, releases, deed type, how liens will be handled, and who pays closing costs. Typical documents at closing include:

• Purchase and sale agreement or written buyout agreement.
• Deed (usually a warranty deed or quitclaim deed depending on circumstances).
• Closing statement showing distribution of funds and payoff of liens.
• Release of interest or affidavit by selling co-owners.

Use a title company or closing attorney to prepare and coordinate these documents. They will produce a final settlement statement and often handle disbursements to payoff mortgages and to the selling co-owners.

6. Record the deed

After closing, record the new deed at the appropriate Alaska recorder’s office (borough or municipality). Recording protects the new owner’s title and provides public notice that the selling co-owners no longer hold an interest.

7. Tax and financial considerations

• Capital gains and basis: a buyout changes ownership basis for the buyer. The seller may face capital gains tax on any gain. Consult a tax advisor for specifics.
• Gift tax: a buyout below fair market value could have gift tax implications for the seller or buyer.
• Property tax reassessment: the local assessor may re-evaluate the property after transfer.

8. If you cannot reach an agreement — partition action

If negotiations fail, a co-owner can file a partition action in court asking the court to divide the property (partition in kind) or order its sale and divide proceeds among the owners. Court-ordered sale can produce a lower price and will generate litigation costs and fees. Consider this a last resort. For procedural help and forms, consult the Alaska court system at courts.alaska.gov.

9. Use professionals

Consider hiring:

• A licensed real estate appraiser to establish value.
• A real estate attorney to draft and review buyout agreements, deeds, security instruments, and to advise about partition risk.
• A title company to run title searches and issue title insurance.
• A tax advisor or CPA to advise on tax consequences.

Even though you can handle parts of this yourself, professional help reduces risk and prevents costly errors.

Helpful hints

• Start with a neutral appraisal so all parties view the number as fair.
• Get written offers and responses. Oral agreements can create disputes later.
• If refinancing, get pre-approved before making a firm offer to siblings so everyone knows the buyer can obtain funds.
• Consider mediation early—mediators can preserve family relationships and keep costs down.
• Use a title company to ensure liens are cleared and the deed is recorded correctly.
• If signing a promissory note to pay siblings over time, secure it with a mortgage or deed of trust to protect the sellers and clearly describe default remedies.
• Keep clear records of who paid what toward mortgage, taxes, insurance, or repairs—these facts can affect the buyout calculation.
• Understand that a forced partition sale often reduces each owner’s recovery because of court costs and the possibility of a sale at auction or by broker.