The Hazards of Co-Owning Real Estate

By Monica Russell

August 9, 2017

It is common for married couples to jointly hold title to their home. If the couple separates, then they either agree on who will keep the home or a judge decides through divorce proceedings. But what if the property owners are not married? This often happens when the owners are in a relationship with each other, or they are siblings who have inherited property from their parents, or they are business partners.

For example, consider the case of Jane Smith. Jane and her boyfriend George Green decide to purchase a property together at a price of $150,000.00. The deed is in both of their names. Jane makes a $30,000.00 down payment on the property and she and George obtain a loan for the remainder of the purchase price. For five years they equally contribute to the mortgage payments. George also installs a new roof on the property. But then the relationship sours and they break up.

Whose house is it? Can Jane force George to leave? Who is responsible for the loan?

Under Ohio law, it is presumed that Jane and George are equal owners of the property and each has a right to the use and profits (i.e. rent) from the property. So, if Jane excludes George from the property, he may be able to demand that she pay him rent. Since they are both on the note for the loan, they both continue to be responsible for it (regardless of who gets to stay in the house).

Because they are not married, this is not an issue that can be heard in the domestic relations court. As a result, unless Jane and George agree on the disposition of the property, Jane will ultimately need to file a "partition" action in the common pleas court in order to sell the property or buy out George’s interest. Partition actions allow one co-tenant (the plaintiff) to force the sale of a property. Each party to the case can provide evidence to the court showing that he or she contributed more to the purchase or improvement of the property and therefore should receive more of the proceeds. Partition actions are usually costly and time consuming.

What can be done to prevent this situation? One option is to have one party in title and the other pay rent pursuant to a written lease. That way there is no confusion over who is the owner of the property. But if both individuals want to be in title, a potential solution would be to have the parties sign a written agreement regarding their ownership of the property. The agreement could address the ownership interest of each party, each parties’ financial responsibilities for the property, and what will happen to the property if the parties decide to part ways in the future. Questions on co-ownership? Contact Critchfield, Critchfield & Johnston, Ltd. at 330-723-6444.

Keywords: real estate
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