How to Buy Out Siblings’ Interests in Co-Owned Property — Practical Steps for Kentucky

Short answer: Confirm title and each owner’s share; get a current market value and payoff information; negotiate a buyout price and payment method; document the deal in a written purchase-and-release agreement; prepare and record a deed transferring the siblings’ interests to you; and, if they refuse, consider a partition action in Kentucky circuit court. This article explains each step, what to watch for in Kentucky, and where to look for the applicable statutes and court resources.

Disclaimer

This is educational information only and not legal advice. For advice about your particular situation, contact a licensed Kentucky real estate attorney.

1. First: Learn exactly how the property is owned

Start by getting a certified copy of the deed (available from the county clerk where the property is recorded). The deed tells whether ownership is held as joint tenants with right of survivorship, tenants in common, or some other form. In practice, many family-owned houses end up as tenants in common (each co-owner holds an individual, divisible share). Knowing the ownership type determines your options and what a court can do if negotiation fails.

2. Check mortgages, liens, taxes, and other encumbrances

Obtain a title report or search at the county clerk/recorder to find mortgages, tax liens, judgment liens, or easements. If a mortgage exists, ask the lender how they handle removing co-owners (often the remaining owner must refinance to get the other names off the loan). If there are liens or unpaid taxes, those affect the equity available for a buyout.

3. Get an objective valuation

Hire a licensed appraiser or use a recent comparative market analysis from a real estate agent to determine fair market value (FMV). Do not rely solely on an opinion from a family member. FMV is the baseline for calculating each co-owner’s share of equity.

4. Calculate the buyout amount

Typical calculation:

FMV minus outstanding mortgages/liens = total equity.
Divide equity by ownership shares (e.g., 1/3 each for three siblings) to get each co-owner’s equity share.
Buyout price = that equity share (or whatever you negotiate).

Example (hypothetical): FMV $300,000; mortgage $140,000; equity $160,000. With three equal owners, each share = $53,333. To buy your siblings’ combined share you’d need about $106,666 (plus closing costs, prorations, and any amount to compensate for discounts or family concessions).

5. Decide how you will pay — funding options

Common methods:

Refinance the mortgage in your name and use loan proceeds to pay siblings (this also gets their names off the loan).
Home equity line of credit (HELOC) or second mortgage in your name.
Personal funds or savings.
Seller-financing where you give siblings a promissory note secured by the property.
Combination of partial cash plus future payments with secured note and deed of trust.

Each option has tax, interest, and foreclosure-risk considerations — talk with a lender and an attorney about the right path.

6. Put the agreement in writing

Draft a written purchase-and-release agreement that includes:

Names of all owners and their current ownership shares.
Buyout price and how payment will be made (timing, escrow details).
Promises that the seller(s) will execute a deed transferring their interest and will release claims.
Allocation of closing costs, prorations of taxes and utilities, and how liens will be handled.
Representations about title and condition, and whether any seller warranties are made.
Default consequences (for example, if payment isn’t made, the sellers might keep the property, or liens remain).

Have the document reviewed or prepared by a Kentucky real estate attorney or an experienced closing agent.

7. Transfer ownership at closing: deed and recording

The siblings should sign a deed transferring their interest to you. Typical deed types:

Quitclaim deed — transfers whatever interest the signer has, without warranties. Faster and common in family transfers, but it offers less protection for the buyer.
General warranty deed — provides the strongest buyer protections (seller guarantees title free of defects), often used in sales with consideration.

The deed must be signed, notarized, and acknowledged as required by Kentucky law, then recorded in the county where the property is located. Recording puts the transfer in the public record and protects your ownership from third parties.

8. Mortgage and title cleanup

If you refinance to remove siblings from the mortgage, the lender will expect an appraisal and credit underwriting. If you do not refinance, be aware the siblings may still be liable on the original loan until it is paid off or refinanced.

Obtain title insurance at closing to protect yourself from unknown title defects.

9. If siblings refuse to sell or won’t agree on terms: partition litigation

In Kentucky, any co-owner can ask a circuit court to partition property when co-owners cannot agree. The court may:

Order partition in kind (physical division) when feasible, or
Order partition by sale — the property is sold and proceeds divided among owners according to share.

Partition litigation can be costly, time-consuming, and may result in a court-ordered sale rather than the owner-occupant keeping the home. Before filing, consider mediation or a negotiated buyout. For statutory background on partition actions in Kentucky see the Kentucky statutes on partition: Kentucky Revised Statutes — Chapter 382 (Partition). Also consult your local circuit court rules and forms at the Kentucky Court of Justice: courts.ky.gov.

10. Practical and tax considerations

Capital gains basis: when you buy siblings’ interests, your tax basis in the property increases by the amount you pay for their shares. Consult a tax advisor about basis adjustment and potential gift-tax issues if the buyout price is below market.
Gift issues: if you pay substantially less than FMV, sellers may have made a gift; large gifts can trigger federal gift-tax reporting.
Estate planning: if you keep the home, consider updating your estate plan (will, beneficiary designations, and deed) so future ownership transfers as you intend.

Helpful Hints

Start by pulling the deed and recent property tax statements from the county clerk. Knowing the facts makes negotiations easier.
Get one neutral appraisal to avoid disputes about value.
If cash is tight, offer seller-financing with a note and deed of trust so siblings receive steady payments and you avoid immediate refinancing costs.
Use escrow for funds and the deed at closing so everyone gets what they expect simultaneously.
Buy title insurance to reduce risk of later title claims from unknown heirs or errors in the chain of title.
Try mediation first; courts favor settling family disputes out of litigation when possible and mediation is often cheaper.
Record the deed promptly after closing to protect your newly acquired interest from other claims.
If you anticipate needing to refinance, talk to lenders early — they will tell you the documentation and appraisal required to remove co-owners from the loan.

Where to find Kentucky statutes and court resources

Kentucky Revised Statutes — partition chapter: https://apps.legislature.ky.gov/statutes/chapter/382
Kentucky Court of Justice (circuit court information and local court contacts): https://courts.ky.gov
County clerk offices handle deed recording (search your county clerk through the Kentucky portal at https://kentucky.gov).

When to hire an attorney

Hire a Kentucky real estate attorney if any of these apply:

Disagreement with siblings over price, shares, or title defects.
There are liens, judgments, or complex titling (trusts, probate issues, or heirs unknown).
You plan seller-financing or complex closing terms.
One or more co-owners threaten litigation or a partition action.

An attorney can draft a binding buyout agreement, prepare the deed, coordinate closing and title insurance, and, if needed, represent you in a partition action in Kentucky circuit court.

Remember: this article explains common steps in Kentucky but does not replace legal advice tailored to your facts. Contact a licensed Kentucky real estate attorney for help completing a buyout or defending your rights if co-owners resist.