Can Co-Signing In-Laws Make Us Sell House?

Dear Real Estate Adviser,

When I met my husband, he already had the house where we now live. His mother and father had co-signed for him, but he always paid the mortgage, though the parents help with other bills sometimes. Now they want us out so they can sell the place. What are their rights? Can they really force us out of our own home?

- Amber

Dear Amber,

Possibly. For the house to be sold, all parties on the deed, including those parent co-signers, would have to sign a transfer of title in a sale. If your husband is just on the mortgage and not on the deed, then sorry, the parents can sell the place without his consent, though the fact that he made the payments thus far would give him grounds to sue if there's any money worth going after.

An option: Partition Sale

But let's proceed on the assumption that both your hubby and his parents are on the deed. In that case, the parents can indeed try to "force" you two out by suing for partition. In such a partition sale (which ultimately can be quite costly) a judge will typically order the property sold and the proceeds equitably distributed among co-owners once any encumbrances are paid, according to most state laws. Your husband would need to present evidence as to why the court should distribute the net proceeds, if any, differently than each owner's percentage, i.e., all those mortgage payments he made. Whether or not the parents paid bills not related to the house itself is likely immaterial. If they want to try to pursue that in small claims court, that's their right.

Another Option: Selling to You, or Refinancing

For you to remain, the parents might be talked into selling the house to your husband and you, provided your collective credit and income are ample. But given your husband's need for help with other bills, it sounds as if you're not in position to do this. The same line of thought applies to refinancing, which would involve taking out a new loan to pay off the parents' share.

The fact that your husband has possession of the house is in your favor, in court, at least. At worst, you should be able to drag this thing out long enough to make other living arrangements.

The 'why' is important

You don't say what, if anything, precipitated this seemingly harsh action, nor what type of sum, if any, the parents contributed to the house in the form of the down payment, repairs, insurance and taxes, nor how much equity is tied up in it. I sense there's a missing detail here. For example, did your husband agree to rebuild his credit within a set time so he could take his parents off the note and then not deliver on that promise? Being a co-signer, I might add, can affect a person's wherewithal to take out other loans and might be hamstringing your husband's folks financially.

Try to Cool Any Rancor

As emotional as these situations can be, it's hard to imagine that your in-laws, husband or you really want the type of estrangement and acrimony that can result from some of the actions discussed. Ultimately, though, you'll probably need an attorney if something can't be worked out.

But these things always work out far better if they're done civilly. So here's hoping that cooler heads prevail. Good luck!

Ask the adviser

To ask a question of the Real Estate Adviser, go to the "Ask the Experts" page and select "Buying, selling a home" as the topic. Read more Real Estate Adviser columns and more stories about real estate.

Bankrate's content, including the guidance of its advice-and-expert columns and this website, is intended only to assist you with financial decisions. The content is broad in scope and does not consider your personal financial situation. Bankrate recommends that you seek the advice of advisers who are fully aware of your individual circumstances before making any final decisions or implementing any financial strategy. Please remember that your use of this website is governed by Bankrate's Terms of Use.