Dissolving real estate partnership and buy-out amount

This is a discussion on Dissolving real estate partnership and buy-out amount within the Other Real Estate Law Matters forum, part of the REAL ESTATE & PROPERTY LAW category; I own a home with 2 other women. We all currently live in the home. When we purchased the home ...

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Old Mar 15th, 2008, 09:56 AM   #1
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Default Dissolving real estate partnership and buy-out amount

I own a home with 2 other women. We all currently live in the home. When we
purchased the home in 2001, one of the co-owners put up 30% of the money in cash. We obtained a mortgage for the remaining amount.

Now I am getting married, and the other two have agreed to buy out my
interest in the property. We had a market value assessment done, and agreed
to the current market value, as per our real estate agent's advice.

My question is in regards to the buy-out price of the house. The person who
put up the money for the original purchase is arguing that since she put up
30% of the original purchase price, she is now entitled to 30% of the
current market value. According to her, we should take the current equity
amount, subtract her 30% of the current market value, and divide the
remaining amount in three equal parts. She says she is entitled to this
amount as interest on her original investment.

I argue that there is no guarantee of interest in real estate. My solution
is to take the current equity in the house, subtract the dollar amount of
her original investment, and divide the remaining amount in three equal
parts.

We have owned the house together since November 2001, and have equally
shared all costs and expenses for the property since that time. No written
agreement exists. I refused to agree to her solution prior to closing the
deal in 2001.

Please respond with a legal solution to this situation. Thank you.
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Old Aug 19th, 2008, 05:21 PM   #2
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Default Re: Dissolving real estate partnership and buy-out amount

She is correct:

assuming: $100,000 purchase price. 30% is her investment plus 1/3 of the rest. therefore if house is now valued at $200,000. You would deduct $30,000, her cash upfront. That would leave $170,000. the $170,000 would then be divided by 3. why, because she has been making 1/3 of the mortgage payments. You have to understand CASH IS KING!!!!
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