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My friend and her husband bought a home with another friend. The friend contributed a small amount for the down payment and has been paying rent but is listed as an equal co-owner on the deed. The friend and husband got a mortgage (in their names only) and are paying that. When they go to sell the house, is the friend entitled to a third of the sale price, or just what’s left over after the mortgage has been repaid.

  • Can you clarify friend1 and friend2 please? Your question is a bit hard to follow. – MonkeyZeus Jul 19 at 16:03
  • Did they get the mortgage at the time they all purchased the house, or did they take out a mortgage against their portion after the purchase? – yoozer8 Jul 19 at 16:04
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    Really a question for the Legal site - or maybe the Interpersonal Relations one. – jamesqf Jul 19 at 17:04
  • We should have voted this closed - duplicate, based on multiple other similar questions. – RonJohn Jul 19 at 18:25
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Your friend and her husband should urgently consult a lawyer. Worst case they are fully responsible for the mortgage while owning only half of the house. I really, really hope that you or they misunderstood something.

  • +1 for the lawyer. The mortgage lender would also probably be very interested in knowing what is going on. – chepner Jul 19 at 14:09
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"listed as an equal co-owner" means just that. Heck, he might own half if your friend+husband are considered a single unit. After all, they are only paying the mortgage because the other friend is paying the rent.

Did your two friends have a contract specifying ownership percentage?

  • He might also own half because the amount of his 'rent' is equal to half of a mortgage payment and the owners have to acknowledge at least some of that rent money is helping to pay the mortgage. Or maybe that 'rent' doesn't entitle him to anything at all, like any other renter vs. the owner. In short, if there is no legal documentation -- a contract or a lease agreement or anything at all -- then I am not sure any law is necessarily applicable. But if the group separates, then some judge will try to do their best. This is why all this really should have been agreed to in writing! – R. Hamilton Jul 19 at 15:43
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If everyone is an equal co-owner of the house, they are all entitled to an equal share of the sale proceeds, unless they have some other agreement/contract in place.

The friend and husband got a mortgage (in their names only)

So they took on some debt, using (hopefully only their portion of) the house as collateral. This has nothing to do with who owns the house.

is the friend entitled to a third of the sale price, or just what's left over after the mortgage has been repaid?

This is a bit backwards - your friend and her husband have an obligation to pay the mortgage, and are responsible for coming up with whatever may still be owed beyond what can be paid off with their share of the sale proceeds (as opposed to selling the house and using all the proceeds, including the other friend's portion, to pay of their debt and dividing up what is left).

  • "This has nothing to do with who owns the house." But the cash payment they made to purchase the house does have a lot to do with who owns the house, and in your thinking, has nothing to do with where the money came from. One "fair and equitable" way to handle this would be to first return the payments the parties made at the time of purchase (these will sum to the purchase cost), and then split the appreciation in value equally among the co-owners. – Ben Voigt Jul 20 at 14:52

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