I am looking for some guidance on what are the exit options for one partner without selling the property.
Basics - Property owned in California - joint tenant title. Both partners on the loan as well. It is a duplex rented out on both sides to tenants with 6months lease remaining.
- If one partner wants to exit, and other partner wants to buy it out, does it go through a full sale process? Is there an easier way to limit costs or paperwork?
- For bank, will they have to issue a new loan or one of the borrower can assume the loan?
Can't speak for the bank. We would treat it as a cash out refi situation.
@Jo-Ann Lapin Can the title be changed to one partner only in this case of refinance? Will it need a new mortgage application, appraisal, etc? We only recently refinanced (3 months back). So, I am not sure if that would be an option.
I'm a real estate newbie, so I'm sorry I can't offer any solutions just yet. But, I did want to thank you for this post, because being able to enter and dissolve a partnership correctly (I think) would be important. I look forward to seeing what solutions others may have to offer, and hope all works well as expected in the end. Good luck to you.
@Raman Bindlish , I'm a California real estate attorney and real estate broker. From your description, it sounds like the property is owner by two individuals as joint tenants (as opposed to owned by an LLC, corporation, or limited partnership). If so, it sounds like this is a general partnership, where one partner can usually exit and dissolve the partnership at any time. I'm not sure what you mean by full sale process, but if one owner is selling to the other, then, yes, you need a purchase contract and other formalities of a California real estate transaction. There might be easier ways to limit costs or paperwork, but I would need more information. The bank will not automatically issue a new loan, so you generally have two options: refinance in your name only or have the owner relinquishing his interest transfer his interest to you and hope that the bank doesn't see it and call the loan due (rare, but usually a possibility based on the terms of the note or deed of trust). Feel free to PM me for more questions and info.
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