This FAQ-style article explains the typical steps to buy out co‑owners (for example, siblings) of real property in Oregon so you can keep the home. It covers how ownership type affects your options, how to value ownership interests, financing and title steps, what to do if co‑owners refuse, and when to get legal help. This is general information only and is not legal advice.
Detailed answer: step-by-step process under Oregon law
1. Confirm how the property is owned
First, determine the form of ownership recorded in the deed. The two common forms are:
- Tenants in common – each owner holds a specific share that they can sell or leave to heirs.
- Joint tenants with right of survivorship – ownership automatically passes to surviving joint tenants when one owner dies.
The ownership type affects how a buyout works (for example, rights of survivorship can limit what an owner can sell). If the deed is unclear, order a copy from your county recorder or get a title report.
2. Get a clear picture of liens, mortgages, and title issues
Order a title search or request a preliminary title report. Look for:
- Mortgage(s) and outstanding payoff amounts.
- Liens, judgments, or easements that could affect value or transferability.
- Recorded ownership shares.
If the property has an existing mortgage in multiple names, the lender may require repayment or refinancing before ownership can change on title.
3. Establish each owner’s share and the property value
To compute a fair buyout price:
- Obtain a professional appraisal or use a CMA from a real estate agent to determine current market value.
- Subtract outstanding mortgage(s) and liens to get net equity.
- Multiply the net equity by each owner’s ownership percentage to find each owner’s share.
Example: home market value $400,000 minus mortgage $200,000 = $200,000 equity. If there are four equal owners, each share = $50,000.
4. Decide how to structure the buyout and how to pay
Common options:
- You pay siblings in a lump sum from savings.
- You refinance the mortgage in your name to cash out the equity needed to buy them out (typical when the house is mortgaged in multiple names).
- You obtain a new loan (personal, HELOC) to fund the buyout.
- You sign a promissory note to the siblings to pay over time, secured by a deed of trust or mortgage on the property.
If you refinance, the lender will evaluate your credit and income. If you cannot qualify for a refinance alone, the buyout may require a sale or shared ownership until financing changes.
5. Prepare a written buyout agreement
Draft a simple purchase agreement or settlement document that states:
- Who sells and who buys.
- Purchase price and how it was calculated.
- Payment method and schedule.
- Deadlines and contingencies (title, payoff, financing).
- Signatures and notarization requirements.
A written agreement reduces misunderstandings and provides evidence if disputes arise.
6. Transfer ownership by deed and record it
Once payment or agreed consideration is completed, the selling sibling(s) must sign a deed transferring their interest to you. Common deeds include a quitclaim deed (fast and simple) or a warranty deed (offers greater assurances). After signing, record the deed at the county recorder where the property sits.
Recording the deed protects your ownership against third-party claims and updates public records. Check with the county recorder for local requirements and fees.
7. Address the mortgage and any lender requirements
If the property has a mortgage in multiple names, you cannot usually remove co‑owners from title without dealing with the lender. Typical paths:
- Refinance the loan solely in your name.
- Obtain the lender’s written consent to remove an owner (rare without refinance).
- Pay off the mortgage at closing.
Talk to the mortgage servicer early to learn payoff figures and lender rules.
8. Consider tax and cost consequences
Buying out co‑owners can have tax consequences:
- Capital gains: selling siblings may incur capital gains tax based on their basis and the sale price.
- Gift tax: if you pay less than fair market value, the difference could be treated as a gift.
- Property tax reassessment: local rules vary; a transfer may trigger reassessment of property taxes.
Consult a tax advisor or CPA about potential tax results.
9. If siblings refuse or cannot agree: partition action (court route)
If co‑owners will not sell or accept a buyout, you can file a partition action in Oregon circuit court. A partition action asks the court to divide property among co‑owners or order sale and distribution of proceeds. See Oregon’s partition statutes for procedure and remedies: ORS Chapter 105 (Partition).
Partition lawsuits can be costly and adversarial. Courts may order physical division when feasible, or more commonly order sale and divide the proceeds per ownership shares.
10. When to consult an attorney
Hire a lawyer if you face any of these:
- Title defects, liens, disputes over ownership shares, or unclear deed language.
- Co‑owners refuse to cooperate or threaten litigation.
- Complex mortgage, tax, or estate issues (e.g., joint tenancy with surviving heirs).
- You plan to use a promissory note secured by the property.
An attorney can draft purchase agreements and deeds, negotiate lender consent or a structured payout, and, if needed, represent you in a partition action.
Helpful hints
- Start by communicating clearly and in writing. A fair, documented offer increases the chance of voluntary transfer.
- Get an independent appraisal rather than relying solely on online estimates.
- Talk to your mortgage servicer early to learn payoff amounts and refinance requirements.
- Use a title company or real estate attorney to prepare and record the deed to avoid mistakes.
- Retain proof of payment and record the deed promptly to protect your ownership.
- If you use seller financing or a promissory note, secure it with a recorded mortgage or deed of trust and use clear default remedies.
- Factor in closing costs, transfer taxes (if any), recording fees, and possible capital gains tax when negotiating price.
- If siblings live in the home or depend on the property for housing, consider phased buyouts, life estates, or a shared ownership agreement to reduce conflict.
Key Oregon law reference: For the statutory procedure for partition actions, see ORS Chapter 105: https://www.oregonlegislature.gov/bills_laws/ors/ors105.html.
Disclaimer: This information is educational only and not legal advice. Laws change and every situation is different. If you need legal advice, consult a licensed Oregon attorney who can evaluate your specific facts.