I currently own a home in new jersey with a co owner. I need to move out. What legal ramifications can the co owner do I terms of me not paying the mortgage?
2 Answers from Attorneys
Your concern is not so much the co-owner as it is the mortgage lender. If you are on the mortgage NOTE (the actual promise to pay), you are fully liable for payment, not half-liable. If you are only on the Deed and Mortgage (the security for payment), at the very least, your credit rating will be affected if the mortgage goes into default and the lender begins foreclosure.
If you and the co-owner have a co-owners' agreement, that should cover what happens when one person wants out. If you don't have such an agreement, and you can't work out an agreement about splitting your interests and getting the lender to release you from the mortgage and note obligations, you will have to go to court for a "partition".
Partition usually results in the court ordering a sale. Proceeds go first to paying off the mortgage and paying the sale costs, including Realtor commissions, and only then will the remaining proceeds be divided between you, not necessarily equally, depending on the proof of who paid what. There will also be legal fees. So both of you would get substantially reduced proceeds, if indeed any are left.
It would benefit both co-owners to work out the sale of the person who is moving out of her/his interest in the home to the remaining co-owner, getting a release from the lender, and the person moving out deeding her/his interest to the remaining co-owner.
Don't forget there will be legal fees in either scenario, if you want to protect your rights and make sure that the transaction meets your goal.
THIS RESPONSE IS NOT LEGAL ADVICE, SINCE I DO NOT HAVE ALL OF THE INFORMATION THAT WOULD BE REQUIRED, AND I DO NOT HAVE A REPRESENTATION AGREEMENT WITH YOU.
* If the answers to your question confirm that you have a valid issue or worthwhile claim, your next step should almost always be to establish a dialog with a lawyer who can provide specific advice to you. Contact a lawyer in your county or township.
* Another reason for contacting a lawyer is that it is often impossible to give a good answer in the Internet Q&A format without having more information. The unique circumstances of your situation and things that you may not have thought to mention in your question may completely change the answer. If you want to be sure that you have a complete answer to your question and an understanding of what that answer means, establish a connection with a lawyer who practices in the area of your concern.
On your simple facts. I concur with Miriam. You have not identified what documents you may have signed with the lender, whether there are any written agreements between you and the co-owner about payment responsibility, what, if anything, is the equity in the property over and above the mortgage balance, if you have offered to allow the co-owner to buy out your interest, etc. A different response may be given if more facts are known.
Related Questions & Answers
How do you dispose of excess funds from a special assessment? Asked 12/13/11, 2:28 pm in United States New Jersey Real Estate and Real Property