Legal Question in Real Estate Law in Massachusetts

As Tenants in common, you are both entitled to the use of the property. The issue is how do you allocate the equity in the home, given you invested substantially more than she did to improve the property. The only way I could come to a rationalization is to apply the same rules one would apply in the allocation of proceeds from a Petition to Partition as part of a sale of the property. In that case let's assume the proceeds from the sale would result in $100,000 profit. You did not say you made $70 K in renovations but that you both did. Assuming that to be the case, then you would get your $5,000 back before you divided the profits. If you now pay an extra $200 per month and that is 60% of the payment. Then you would be entitled to get back the difference in equity built up from that point on until you sold the property. Assume for the moment that the equity(principal repayment) was $300.00 a month from the point of the change in the mortgage payment, you would be entitled to $180 per month and she would be entitled to $120 per month and the difference would be $60 per month,. Let's say the sale of the property takes place in 12 months after the change in the mortgage payment. You would be entitled to your $5,000 and $720 in increased principal payments. You would also be entitled to 60% of the interest deduction and 60% of the property tax deduction going forward. This is how a Petition for Partition would allocate the net proceeds, the balance of the proceeds $100,000-$5,720 would be split equally.

However without some sort of agreement you will have an argument with your sister. You either have to have an agreement to that effect or something like it or you can spend the money to create a two unit condo and see if the Bank will allow it or you will each need to refinance, assuming you agree on the creation of the condo. You will need to hire an Architect to draw as built plans for the Condo documents. Then an attorney to draft the condo documents.

The easiest way forward is to come to an agreement about how to allocate proceeds if and when the property is sold. If you do have such an agreement made, have an attorney draft it for you.

Thank you for your question.

Both parties may need to sit down and see if they can mediate or negotiate a resolution to this. I recommend that you each have counsel, or that you sit down with a neutral party who can help you both understand real estate ownership law and this type of real estate dispute. To answer your specific questions, there really isn't much you can do if she starts to short on her contributions. Payments simply need to be made and you are each responsible for the entire home loan. You may have an agreement to split it, but the bank doesn't care about that. You should go to a lawyer before it is time to see to see if you can work out an arrangement. You don't want to have a good deal in the height of the Spring market and then have the deal fall apart because you can't agree on how to sell or how to divide sale proceeds. Either one of you has the right to buy out the other person, if the other is willing to sell. You also have the right to sell the property together or force the other person to sell the house by filing a partition action in court. Our office - or another like it - could assist you in working this out, representing you in the sale, and distributing the sale proceeds as a neutral party for you both.

There is much to discuss in a case like this, and you want to have the internal discussion, negotiation, or fight before putting it on the market. Once you have agreed on terms, you work together to get the highest possible price!

You have a right to PARTITION the property, but this will not be best. Best would be to (a) buy her out; or (b) sell. From your question, it sounds like option (a) will require her to be reasonable, and that her being reasonable is unlikely. I would talk to her about the importance of your relationship, and prepare to sell. Good luck!