Disclaimer: This is educational information only and is not legal advice. Laws change and every situation is different. Consult a licensed Maryland attorney and tax advisor before taking action.
Overview
When two or more people own real property together in Maryland and one owner wants full ownership, the common solution is a buyout combined with refinancing. That typically means the buying owner obtains new financing in only their name, uses the proceeds to pay the selling owner their equity share, and then records a deed transferring full title. Below is a clear, step-by-step explanation of how that process usually works under Maryland law and practical tips to get it done.
Step 1 — Confirm ownership, liens, and shares
Start by getting a copy of the deed and a recent title report (or ordering a title search). The deed shows how owners hold title (joint tenants, tenants in common, etc.) which affects transfer mechanics. The title search reveals mortgages, liens, judgments, and easements that affect payoff and marketable title.
Step 2 — Determine the buyout amount
Calculate the home’s current market value (hire an appraiser or use a licensed agent’s market analysis). Subtract outstanding mortgage balance(s), liens, and estimated closing costs to find total equity. Allocate equity according to the owners’ legal ownership shares (for example, 50/50 unless the deed or an agreement says otherwise). The seller’s buyout amount usually equals their equity share; parties may adjust that number by negotiation for convenience, closing costs, or tax considerations.
Step 3 — Choose a financing method
The buying owner must choose how to fund the buyout. Common options:
- Refinance the property into a new mortgage with only the buying owner on the loan. The lender pays off the existing loan(s) and the buyer uses the new loan proceeds to pay the co-owner.
- Take out a home equity loan or HELOC in the buyer’s name to pay the other owner.
- Pay cash or obtain a private loan (from a bank, family, or seller-financing arrangement).
- Use a promissory note and installment buyout if the seller agrees to a carry-back payment plan.
Most buyers use refinancing because it also removes the seller’s liability on the mortgage. Note: lenders will evaluate the buyer’s credit, income, debt-to-income ratio, and the property’s value. If the buyer does not qualify, consider alternative financing or negotiate different deal terms.
Step 4 — Lender requirements and removing the other owner
Lenders generally will not remove an owner from a mortgage without a refinance or formal release. Even if the deed transfers, the prior co-owner can remain liable on the original mortgage unless the lender releases them. Therefore, plan closing so the buyer’s new loan pays off the old loan(s) and the seller signs a deed (usually a quitclaim or warranty deed depending on negotiation and title company guidance) transferring their interest.
Step 5 — Draft and sign the buyout agreement
Put the buyout terms in writing. The agreement should state the buyout price, how and when payment will occur, who pays closing costs and recording fees, prorations for taxes and utilities, and what documents will record at closing (deed, lien releases). If seller financing or a promissory note is involved, the agreement should include the payment schedule, interest rate, security (e.g., a mortgage or deed of trust), default remedies, and dispute resolution terms.
Step 6 — Closing and recording
At closing the buyer’s new lender (or other financier) funds the transaction. The lender’s closing agent or title company will obtain payoff letters for existing mortgages, prepare the deed transferring title to the buyer alone, collect lender-required documents (insurance, inspections as applicable), and arrange recording. After closing, the deed and any releases or satisfaction documents should be recorded in the county land records.
Step 7 — If the seller won’t cooperate — partition actions
If a co-owner refuses to sell or accept a fair buyout, the buying owner can consider filing a partition action in Maryland court to force a division or sale of the property. A partition can result in a physical division (rare for homes) or a court-ordered sale with proceeds divided among owners. Partition actions are a remedy of last resort: they are time-consuming, costly, and outcomes can be uncertain. For information about Maryland courts and housing/partition resources, see the Maryland Courts self-help pages: https://www.mdcourts.gov/legalhelp.
Maryland statutory and procedural references
Maryland’s real property laws govern conveyances, deeds, and recording. For the official text of Maryland’s Real Property statutes, see the Maryland General Assembly site (Real Property): https://mgaleg.maryland.gov/mgawebsite/Laws/StatuteText?article=rp. For court procedures (including partition), consult the Maryland Courts website at https://www.mdcourts.gov and seek local rules or an attorney to apply the law to your facts.
Common timeline and costs
- Valuation and negotiation: 1–3 weeks (longer if contested)
- Mortgage pre-qualification and underwriting: 4–45 days depending on lender
- Closing and recording: typically within days of loan approval
- Common costs: appraisal fee, title insurance, recording fees, transfer or recordation taxes (depending on county), attorney or closing agent fees, lender fees, and possible payout of subordinate liens
When to hire professionals
Because real estate and financing intersect with contract, tax, and procedural law, consider hiring:
- A licensed Maryland real estate attorney to draft/approve buyout and closing documents and handle title issues
- A licensed appraiser for an objective valuation
- A title company or closing agent to coordinate payoffs and recording
- A tax advisor to evaluate capital gains, basis, and gift-tax implications
Helpful Hints
- Get everything in writing. Put the buyout price, payment method, closing responsibilities, and timelines in a signed agreement.
- Order a title search early to reveal liens or judgments that could delay closing.
- Confirm that the buyer’s new loan will fully pay and remove the existing mortgage—otherwise the seller may remain liable.
- Ask the title company about required releases, payoff letters, and local recording/transfer taxes prior to closing.
- Consider escrow for the seller’s funds until the deed and lien releases record.
- If you cannot agree, consult an attorney before initiating a partition action—courts can force a sale and the result may not match either party’s expectations.
- Check your county’s recorder/land records office online for filing procedures and exact recording fees.
- Keep tax records and closing statements. They matter for future capital gains calculations.
Need help finding a Maryland attorney experienced in co-ownership buyouts or real estate refinancing? Contact your local bar association or the Maryland Courts’ resources page to locate qualified counsel in your county.