Legal Question in Real Estate Law in Massachusetts

Yes, the third party has to provide a deed releasing their interest in the property or if they are not giving up their equity in the property, then they need to sign the Mortgage but will not be required to sign the note. To do that you need the consent of the lender.

The deed is signed and delivered at closing.

As to the terms of your agreement, you should come to an agreement of some sort well before the refinancing, such as the owners agree to pay the third party a $1000 per month for x months at y% interest and in the event of a sale the third party gets paid-off. If she wants a mortgage to secure her interest you may need the consent of the new lender.

If you are not using an attorney to assist you with all of this other than lender's attorney, then you need to get an attorney to assist you.

If you have more questions, please feel free to call me.

There is something terribly wrong in what you describe!

Your friend needs an attorney immediately. The owners will not be permitted to refinance the property unless either your friend joins in the refinance with them, or sells her interest to the other owners. If she is going to sell her interest, she will want to make sure that she addresses whether she is entitled to any equity in the property.

As lons as she is an owner, she will need to be involved. Our office routinely handles real estate transactions of this kind, including conflicts among coowners, and I would be happy to speak to your friend. 617-357-4898.