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Me and my sister in law bought a house. We asked her help to acquire the loan. She signed the mortgage loan for a 5 year contract, and we got the house. Me and my wife paid all the expenses and down payment for the house, my sister in law never gave a single cent for acquiring the house.

The title stated she has 5% share and 95% for me. We all live in the same house and she is paying me 600 a month because she came to live with us with her two kids and with the 600 everything is inclusive down to utilities.

Something went wrong and now she wants her name out of the mortgage and she is claiming her 5% share. Me and my wife are paying the mortgage and never had any default, we pay property taxes, insurance and all the utilities, my wife maintains the house and we renovated the house significantly without any help from her.

Do I have the right to refuse her demand to remove her name since I believe I cannot stand alone yet on the mortgage?

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    This is really more of a legal question. But, to me it seems if your note indicates she gets 5% of the ownership but doesn't specify contributing to the mortgage and no amendment was made after she moved and began paying rent then she's entitled to her 5%.
    – quid
    Jul 7, 2016 at 0:26
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    I agree with quid. That said, it is hard to sell 5% of a home. Who would buy that? Your best bet is to make her an offer for her 5%. Say the home is worth $100,000. 5% would be $5,000, but since there is no real market for that 5%, offering $3,000 would be a good deal.
    – mikeazo
    Jul 7, 2016 at 2:14
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    If she was paying you rent, then it seems to me like she was paying some of the mortgage (as I assume that rent went to the mortgage)... but yes, this is a legal question really.
    – Joe
    Jul 7, 2016 at 2:43
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    What law applies? That is, what country/state is the property in?
    – Dale M ♦
    Jul 7, 2016 at 14:21
  • Lots of good advice here, but all the answers seem to overlook one aspect of it - she co-signed the loan, and as such she has provided something of value (she has taken on risk/liability) - even if assuming did not contribute financially after that. Depending on the risk profile of the other signatories and environmental risks this may well have been worth 5% of the value of the home. Tangentially related - I have - in a disputes tribunal in NZ - got the maximum allowable award because the adjudicator assigned value to a co-signers signature.
    – davidgo
    Feb 8, 2017 at 3:54

2 Answers 2

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I can't help with the relationship issues: here are the legal issues.

  1. She legally owns 5% of the house and you own 95%
  2. I presume that the loan agreement is a contract between you, her and the lender so removing her name from the loan is at the discretion of the lender, not you or her. I would be very surprised if the lender would allow this without totally refinancing the loan.
  3. Whatever arrangements you had with your sister are probably not enforceable because the presumption is that arrangements between family members are not legally enforceable contracts. Unless you can provide evidence that both of you intended to create legally binding obligations for what you assert (like a signed document) then what you say is just hot air.

Legally, neither of you have the power to get her name off the loan. As a co-owner she is entitled to live in the property rent free. Each of you is jointly (i.e. together) and severally (i.e. individually) liable for making the loan repayments - in what proportion that should be done is a matter for you two to sort out - the lender doesn't care who pays so long as they get paid.

https://www.law.cornell.edu/wex/tenancy_in_common

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  • "As a co-owner she is entitled to live in the property rent free" Is that really always true? I would assume that at the least she would be limited to using 5% of the house (however that is measured). Or that co-ownership only gives you a claim to money (such as rent revenue), but not to using the house. I'd be curious if you could clarify.
    – sleske
    Mar 10, 2017 at 11:17
  • @sleske see link
    – Dale M ♦
    Mar 10, 2017 at 12:37
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    Ah, thanks, interesting. However, as far as I understand, with Tenancy In Common there will be an additional contract ("Tenancy In Common Agreement") which determines who gets to use what, and how. So I guess details will depend on that contract. Hm, I think I'm seeing a new question here ... :-).
    – sleske
    Mar 10, 2017 at 12:43
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    @sleske there can be such an agreement but there doesn't have to be
    – Dale M ♦
    Mar 10, 2017 at 12:45
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You don't need to do anything - (or I won't) let her move to perfect her claimed interest. You have facts to show pattern of payment (600 that sets a contract) and other facts which would result in minimum costs - 1st get a comparable value of the house -in order to determine what 5% represents - let's say, the house needs work -new roof etc., that would subtract from comparable value - personally, I sit back and let her try to enforce the 5% but I be happy to take her name off it - then (if you want) give her a promissory note (that is allows for your discretion to pay) for the 5% (without interest) to be paid when ever the house is no longer under your control -which includes inheritance to wit: controlled by you still when transferred to your heirs - having 5% of something versus enforcing it is a whole other creature - given I see no power to enforce - in other words, seems like you are sitting in a good position - via you have no obligation to determine what the 5% represents and the ability to reduce an amount if she every comes up with a number - and no obligation to pay it once it is determined and even then, take her name off and pay her down the road- though, be careful if you give her a promissory note as to no enforcement time even specify up to your discretion

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  • In the OP it sounds like the primary doesn't want the cosigner off the mortgage. I can only imagine this is because the cosigner has some credit that reduces the cost -- guessing could be VA benefits, or income that keeps the lender from charging PMI?
    – feetwet ♦
    Jul 12, 2016 at 1:23
  • I think there's a good answer somewhere in here, but with the grammar mistakes and inconherences I find it hard to make sense of it. Maybe someone who understands the answer can help?
    – sleske
    Mar 10, 2017 at 10:54

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