My mother moved out of a home she owns 1/3 of. She would like to get a buyout. The house was recently appraised at $866,000. My mom paid $300,000. A friend paid $300,000, and my brother paid $216,000. What is her next step in preparing a request for buyout? I.e. A formal letter. Is there a form I need to use?
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1Welcome to Money.SE. There's a good chance this question is closed as a legal question, not personal finance. The devil is in the details - what was the agreement going in? Was there a specific set of plans to address a future buyout or sale? How is the odd deposit from Brother taken into account? Are there odd fractions, not quite 1/3 or does he have a loan? By the way, it looks like the value has gone up $50K. But even a 5% commission is $43K. So she'd be looking to get her money back with little to no profit. Has she talked to the 2 other owners?– JTP - Apologise to Monica ♦Mar 2, 2015 at 10:44
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1 Answer
The math of the question goes something like this:
The total purchase price was 816K, and your mom paid 300, so she owns 36.765% of the house.
Currently the house is worth 866K, so assuming that you could sell it for that without closing cost she should receive $318,382. However, that is unlikely so you should deduct closing costs from the total sales price.
That is the math side of the issue. However, the bigger question is what is the legal side of the issue? What did the parties agree too if a person became disinterested? Is it in writing? I assuming not, otherwise there would not be much of a need to ask this question. Potentially she has a total mess on her hands.
When forming partnerships things should be written down and should cover a lot of negative contingencies.
