Legal Question in Real Estate Law in California

In business deals of all kinds, including buy-outs between co-owners of real estate, it's common for the party or parties proposing the transaction to have to pay some premium over the theoretical "fair market value" in order to entice the party or parties that didn't think up the deal. Also, there is some premium value associated with full ownership and control of a business or property----buyers will pay a big premium to increase their stock ownership from 49% to 51%, for example, or from 99% to 100%.

In your case, there are a zillion possible ways to price and structure a deal. One relatively simple idea might be that Party X who is proposing the deal would be required to pay all of the costs, fees and comissions of the transaction, and Party Y would be entitled to receive a full 50% of the gross selling price or appraised value. Here, one of the costs the party proposing the deal must face is getting the lender to approve the transaction, which typically involves paying a processing fee.......and might require rewriting or refinancing the loan.

In addition to lender permission (or refinancing), the parties here will want to consider the probable tax consequences of any change of part ownership, which include county property taxes and state and federal taxes on capital gains, etc.