Removing Your Name from Joint Property in California
You are probably going through a lot right now. And you were likely going through a lot when you made the decision to co-sign on a mortgage. Whether you joined yourself with a romantic partner, spouse, family member, etc., it probably seemed like a good idea at the time.
However, as you are now likely aware, co-signing on a loan or co-owning property can lead to unintended complications down the line. While many potential scenarios exist, the fact remains that situations can change. You may now find yourself wanting to remove yourself from the loan or separate yourself from ownership in this property. But how do you do that?
Neither the co-signer/co-owner nor the bank will likely be happy with the idea of you removing yourself from the mortgage. As co-signer on the mortgage you shoulder liability for the amount of the loan should the loan go into default. Removing yourself puts all of the onus on the other party. This is not to say it is not possible to remove yourself from the loan through various means. You should just enter into this process understanding that your co-signer and lender will probably not be excited by the idea of you removing yourself from the equation.
With that in mind, here are some avenues to consider if you are considering removing yourself from liability/ownership in your co-signed mortgage/loan.
- Request that Your Bank Remove you from the Mortgage
This is a simple method, though you should not get your hopes up. When you co-signed on your loan both borrowers likely agreed to hold joint and several responsibility for repaying the loan. This means that both parties are liable for paying back the entirety of the loan. This means that if the loan was for $100,000, both co-signers are separately liable for the amount of $100,000. Liability for the loan is not divided in half, with each co-signer responsible for their own half. If your co-signer cannot (or will not) pay, then you will become responsible for the entire amount of the loan.
What this means, in the present context, is that a bank has little to no motivation to remove a co-signer’s name from a mortgage. There is no apparent benefit to them and the risk of loan default goes up significantly. However, various circumstances in your specific case may still warrant giving this route a go.
- Refinance the Mortgage
Another potential solution that can remove an individual from a joint mortgage is for the loan to be refinanced under a single owner’s name. Refinancing in this will release you from any joint and several liability for the loan.
This route depends on the other co-signor having acceptable criteria for refinancing the mortgage. This takes into consideration credit scores, debt to income ratio, equity, income, etc. Again, this route places much, if not all, of the pressure on the co-signer. They may be unwilling or unable to complete the task in this way.
- Sale of Jointly Owned Property
If the bank refused the request to remove your name from the mortgage, and/or the other co-signer cannot or will not go through with a refinancing, you can always consider the option to sell the property.
Sale of the property can allow the parties to retain equity while also nullifying issues inherent in so-ownership.
- Partition
A final option to consider could be bringing a partition action. This is a court order that acts to force the sale or division of shared property. A partition action forces the sale of the property and results in the co-owners splitting their shares of the equity.
Contact Cardwell, Steigerwald Young
The knowledgeable San Francisco property division attorneys at Cardwell, Steigerwald Young are available to help you navigate through any of your case needs. Contact our office today to begin discussing your situation with an attorney who can help.
Sources:
selfhelp.courts.ca.gov/divorce/property-debts
forbes.com/advisor/legal/divorce/california-divorce/
