Buying Out Siblings’ Interests in Co-Owned Property in Vermont

Detailed answer — practical steps to buy out co-owners so you can keep the home

If you co-own a Vermont home with siblings and you want to buy out their interests so you can keep the property, follow a clear sequence of steps. Below is a practical roadmap that explains the legal and transactional issues you will encounter under Vermont law and common practice.

1. Confirm how title is held

Obtain a copy of the deed from the town clerk or county land records. The deed will show whether you and your siblings hold the property as:

• Tenants in common — each owner has a distinct share that can be sold or transferred.
• Joint tenants with right of survivorship — ownership automatically passes to surviving joint tenants on death (this affects how interests transfer on death).

Knowing the form of ownership determines what each sibling can sell and whether a simple buyout deed (quitclaim or warranty deed) will transfer the sibling’s interest.

2. Do a title and mortgage check

Order a title report or have an attorney/title company search the chain of title and identify any mortgages, liens, or judgments. If there is a mortgage on the property, note whether all co-owners are on the loan. Lenders typically require consent or refinancing if the borrower changes.

3. Get a market valuation

Hire a licensed appraiser or work with a real estate agent to determine current fair market value. A professional appraisal gives a neutral basis for the buyout price and can avoid disputes.

4. Calculate the buyout amount

Common approaches include:

• Buyout = (market value of the whole property) × (owner’s percentage share) − share of outstanding liens/mortgage and prorated expenses.
• Negotiate a discount if one sibling will keep sole responsibility for future maintenance and taxes.

Document any agreed valuation method in writing so everyone understands the math.

5. Decide how the buyout will be funded

Typical options:

• Refinance the mortgage in your name alone (removes siblings from loan) — lenders will require sufficient credit, income, and equity.
• Home equity loan or HELOC.
• Personal loan or family financing.
• Seller financing — you pay siblings over time under a promissory note secured by the deed until paid in full.
• Pay cash from savings or other sources.

If you keep an existing loan that names siblings as borrowers, they will remain legally liable unless the lender removes them. Most co-owner buyouts therefore use refinancing or an agreement that explicitly addresses mortgage liability.

6. Prepare a written buyout agreement and closing paperwork

Key items to include in the buyout agreement:

• Buyout price and payment terms.
• Date for transfer and closing, and who will pay closing costs.
• Which deed will be used (quitclaim deed is common for intra-family transfers; a warranty deed provides stronger title warranty).
• Prorations for property taxes, HOA dues, utilities, and other carrying costs through closing.
• What happens if financing falls through (e.g., deposit forfeiture, extended deadline).
• Representations about liens, encumbrances, and authority to convey.

Have a title company or attorney prepare or review the deed and closing documents. Use escrow to hold funds and ensure the deed does not record until payment conditions are met.

7. Close and record the deed

At closing the sibling selling their interest signs the deed (commonly a quitclaim or warranty deed). The deed is recorded in the local land records (town clerk or county registry). Recording puts third parties on notice of the change in ownership.

8. Handle mortgage payoff or refinancing

If you refinance, the new lender pays off the old mortgage and you become the sole borrower. If you cannot refinance and the lender won’t allow assumption, you may need to negotiate with siblings (seller-financing, keeping them on mortgage while transferring title — note they remain liable for the loan).

9. Consider tax and estate effects

Buyouts can change capital gains basis and create gift-tax considerations if the buyout price is below fair market value. Keep good records of valuation and transfer documents. Consult a tax professional about federal and Vermont tax consequences. For information on Vermont real estate-related taxes and recording fees, see the Vermont Department of Taxes: https://tax.vermont.gov.

10. If you cannot reach an agreement: partition actions and other remedies

If a sibling refuses to sell or cooperate, you may file a partition action in court to force a division or sale. In Vermont, courts hear partition actions and can order physical division when practical or a judicial sale when not. A partition action can be costly and results are unpredictable: the court may order the property sold at auction rather than letting you keep it. For information about Vermont statutes and procedures, consult Vermont Statutes Online: https://legislature.vermont.gov/statutes and consider discussing options with a Vermont attorney.

Helpful hints

• Start by gathering the deed, mortgage statements, and recent tax bills. These documents answer many early questions.
• Get a neutral, professional appraisal to avoid family disputes over value.
• Use a written agreement and escrow to protect everyone during the transaction.
• Talk to lenders early. If you need to refinance, pre-qualify before agreeing to terms with siblings.
• If emotions run high, consider mediation. Courts often encourage or order mediation before a partition sale.
• Record the deed promptly after closing. Recording is essential to protect ownership rights.
• Keep copies of every document, check, and communication related to the buyout for taxes and future title questions.
• Before finalizing, consult a Vermont real estate attorney and a tax professional to confirm legal and tax consequences for your situation.