Need to remove a name from title and mortgage. Is it possible?

Question

Hello. I co-own a property in Kissimmee, Florida with my father in-law (50-50). We agreed for me to buy his share and so I'd like to remove his name from the title and mortgage so that everything is under just my name. Is this possible to do? If so, would a real estate attorney be able to help with this process?

Thanks in advance.

Frank Chin · Answer

We went thru this.

We had an attorney handle the title part. If it is a purchase, with cash, there should be a P&S contract stipulating a certain price, so he'll have a basis to pay his capital gains tax, and for you to create a basis for the half you bought from him, for tax purposes. In our case, our mom in law gifted her half to us, as part of her estate planning, and our attorney had to handle the gifting paperwork. Ours involve creation of notes, and then forgiving them over several years, to take advantage of the annual limits on gifting.

As to the mortgage, you cannot just take his name off the mortgage. You'll have to get a new mortgage based on your creditworthiness alone as most mortgages out there are already sold to investors, the originating bank no longer owns them. It is granted originally based on the credit worthiness of you and him, the investors bought it that way, and you can change things mid stream. We were going to refi anyway, so we did it in conjunction with the refi. You can leave the mortgage as is, but he'll be on the hook if you don't pay, and he no longer has any interest in the property.

Andres M. · Answer

@Javi Chipi, yes, that'd be great.  Can you PM me the attorney's contact info?  Thank you.

Frank Chin · Answer

We have done this within our family. Either party is entitled to sell his or her respective portion to the other. A normal P&S contract used is whether you're selling to your father in law or a stranger. In our case, it's handled exactly like the way we bought a new property, except this is half, and we get a new mortgages, pay the mortgage tax, the whole works.

If it is a portfolio loan, the lender could possibly amend the mortgage after vetting the credit worthiness of the buyer, and take the father in law off. This would be the only reason they need to approve the change in title, if they modify the mortgage. But no mention here that it is a portfolio loan. The fact is, banks originate these mortgage, it's normally sold as a package to investors, and investors buy these mortgages safe in the assumption it will not modify when bought in any way.

If you remember, we went through a banking crisis where banks package and sold questionable loans to investors. Imagine what would happen if  mortgages are made to 2 people, after the mortgages are made, one is allowed to be taken off resulting in default. I don't think the banking system is dumb enough to allow this to happen.

Andres M. · Answer

@Frank Chin,  I had a feeling I'd have to refi to take his name out of the mortgage.  Thanks for confirming.

Need to remove a name from title and mortgage. Is it possible?

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