What to Do With a Jointly Inherited House

By Beverly Bird

Initially, learning that you’ve inherited a home might seem like a good thing. However, that happiness can quickly turn to consternation if you realize that the decedent left it to you jointly with other individuals. Your co-owners might be family members or acquaintances. In either case, you can easily find yourselves at an impasse regarding what to do with the house, because every action you take, including selling it, requires the legal consent of everyone involved.


If you inherit the home jointly with other individuals, and if you want to keep the house but your “partners” do not, you can buy them out. You should agree on an appraiser and determine the house’s fair market value. You can then obtain a mortgage in the amount of your partners' interest in the home, assuming there's not an existing mortgage against it. If there is, you would have to refinance enough to both pay off that mortgage and pay your partners for their equity. Most lenders require a deed in place at the time they finance the mortgage, transferring your partners' interests in the home to you. If the house was conveyed to you through the probate process, the executor of the estate probably passed it into your joint ownership with an executor’s deed. The other beneficiaries can sign quitclaim deeds, transferring to you the interest they were granted via the executor’s deed. If you received title through a beneficiary deed, the same procedure applies.


Another option is to rent the house if neither you nor your co-beneficiaries want to live in it. You can maintain it as an investment and apportion the rental proceeds among yourselves. This assumes that the property is rentable and not in disrepair. Otherwise, you and the other beneficiaries would have to agree to either invest funds into fixing it up or sell it instead, as-is and possibly for a reduced price that reflects its condition. If you choose to repair it, memorialize your terms regarding who will pay for what in a written agreement. You’ll also want a written agreement stipulating when and how you’ll distribute the rent proceeds among yourselves. For example, if one of you is going to take an active role in managing the rental and dealing with the tenant, that beneficiary might be entitled to a larger percentage of the rent payments.

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Forced Sale

The law does not force any of you to retain the home against your will. If you want to sell, but your co-beneficiaries want to hold onto the house, this doesn’t trap you into maintaining an investment you don’t want. You can file a lawsuit for “partition.” This divides the value of the home into segments for each of you, but a sale is usually required to achieve this. If you cannot come to an agreement regarding sale of the property versus retaining it, the court will force its sale. You and the other beneficiaries will each receive your fair share of the proceeds.


If your co-beneficiaries are relatives, a forced partition sale might cause hard feelings from which your family can’t easily recover. Before you choose this route, confer with an attorney about the pros and cons to make sure it’s really worth it. You might also want to speak with a tax professional regarding the timing of a sale, whether it’s forced or by mutual consent. The longer you hold onto the property, the more likely it is that you’ll incur capital gains tax when you sell. Just as you jointly own the property, you’re all jointly liable for the tax.

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