When a co-owner stops paying the mortgage, you are legally on the hook for the full payment, and you have a short window to act before the loan goes into default. Your realistic options are to cover the payment yourself while you negotiate a buyout, refinance, or voluntary sale, or to force the issue in court through a partition lawsuit. Which path fits depends on whether your co-owner will cooperate and whether you want to keep the house.
Why the Lender Will Come After You
Everyone who signs a mortgage takes on what the law calls joint and several liability. Each borrower owes 100% of the debt. Any side agreement you made with your co-owner about splitting payments is irrelevant to the lender. If your co-owner walks away, the servicer will demand the entire monthly payment from you and can sue you alone if it goes unpaid.
The clock starts fast. Once a payment is 30 days past due, the servicer reports the delinquency to all three credit bureaus, and it stays on your credit report for up to seven years.1Experian. How Long Does a Late Mortgage Payment Affect Your Credit? Late fees are added on top, calculated as a percentage of the overdue amount under your loan documents and state law.2Consumer Financial Protection Bureau. What Are Late Fees on a Mortgage? Keep missing payments, and the acceleration clause buried in nearly every mortgage lets the lender demand the entire remaining balance at once.3Legal Information Institute. Acceleration Clause
You do have a buffer. Federal law bars a servicer from filing the first foreclosure notice or court document until you are more than 120 days delinquent.4eCFR. 12 CFR 1024.41 – Loss Mitigation Procedures That four-month window is where everything else in this article happens.
What to Do Right Now
The fastest way to protect your credit is to cover the full payment yourself. It feels unfair, and it is. But a late mark hits your score regardless of which name on the loan caused it, and a foreclosure is far worse for both of you. Treat the payment as damage control while you work on a permanent fix.
If you can’t cover the full amount alone, call your mortgage servicer’s loss mitigation department right away and ask about:
- Forbearance, which temporarily pauses or reduces payments for a set period. You still owe the money, but you repay it later through a plan or by extending the loan.5Consumer Financial Protection Bureau. What Is Mortgage Forbearance?
- A loan modification, which permanently changes the loan terms. That can mean a lower rate, a longer term, or a reduction in principal.6Consumer Financial Protection Bureau. What Is a Mortgage Loan Modification?
Submit a complete loss mitigation application before the servicer files its first foreclosure document, and federal rules block the servicer from moving forward with foreclosure while your application is being reviewed.4eCFR. 12 CFR 1024.41 – Loss Mitigation Procedures This is one of the strongest tools you have. Don’t sit on it.
If Your Co-Owner Will Cooperate
Stabilizing the payment buys you time for a real resolution. With a willing co-owner, three options generally work.
Buy Them Out
One of you purchases the other’s share of the equity. Get a professional appraisal to establish current market value, subtract the remaining mortgage balance, and the result is the equity to be divided. The buyout price reflects the departing owner’s percentage of that equity.
A buyout almost always has to be paired with a refinance. Signing over the deed by itself does not remove the departing co-owner from the loan. Until the mortgage is refinanced, both borrowers remain liable no matter what the deed says.
Refinance Into One Name
The owner keeping the house applies for a new mortgage alone and has to qualify on their own income and credit. If approved, the new loan pays off the joint mortgage, and the departing co-owner comes off both the loan and the title. This is the cleanest break because it ends the financial tie completely.
Sell and Split
If neither of you can or wants to keep the property, selling is the simplest way out. Sale proceeds pay the mortgage balance, commissions, and closing costs first; what remains is divided according to ownership interests. Some states add transfer taxes to the bill, which will reduce what each of you walks away with.
A Warning About Deed Transfers Without a Refinance
Most mortgages include a due-on-sale clause that lets the lender call the whole loan due when the property changes hands. If one of you simply quitclaims a share to the other without refinancing, the lender could in theory demand full repayment. The Garn-St. Germain Act carves out protected transfers for residential properties with fewer than five units, including transfers between spouses or to children, transfers tied to a divorce or separation decree, transfers to a surviving joint tenant on death, and transfers into a living trust where the borrower keeps beneficial interest and occupancy.7Office of the Law Revision Counsel. 12 U.S. Code 1701j-3 – Preemption of Due-on-Sale Prohibitions If your situation doesn’t fit one of those exceptions, refinance before transferring the deed.
If Your Co-Owner Won’t Cooperate
When a co-owner refuses to buy you out, won’t agree to sell, and won’t pay, the legal remedy is a partition action. Any co-owner can file one, regardless of the size of their ownership share, and the other owner’s consent is not required.
Because a house can’t be physically split, the court orders a partition by sale. The property is sold, often through a neutral commissioner or referee appointed by the court, and the proceeds are divided among the owners. Attorney fees, filing fees, and commissioner fees come out of the sale proceeds before anyone is paid. A straightforward partition typically takes six to twelve months from filing to final distribution. Contested cases, especially those with fights over ownership shares or reimbursement credits, can run eighteen months or longer.
Inherited Property Has Extra Protections
If you co-own the house because you inherited it, more than twenty states have adopted a version of the Uniform Partition of Heirs Property Act. It gives heirs the right to a professional appraisal, a right of first refusal to buy out other co-owners at the appraised price, and a requirement that any court-ordered sale go through a commercially reasonable process rather than a quick auction.8Land Trust Alliance. Partition of Heirs Property Act
Getting Reimbursed for What You’ve Paid
Every mortgage payment, tax bill, insurance premium, and necessary repair you cover on your co-owner’s behalf is recoverable through a contribution claim. You can bring it as its own lawsuit or fold it into a partition action, where the court conducts an accounting before dividing sale proceeds. Your extra payments are credited to you off the top, then the remainder is split by ownership percentage.
Documentation is what wins these claims. Save mortgage statements, tax bills, insurance declarations, and repair receipts, and be ready to show what you paid, when, and why the expense was necessary. Expenses to preserve the property’s value generally qualify; optional upgrades and cosmetic improvements typically do not get full reimbursement.
If the amount owed is modest, small claims court is an option. Limits vary widely by state, from as low as $2,500 to as high as $25,000. A small claims judgment can be enforced through wage garnishment or a bank levy.
When One of You Lives in the House
A common complication: your co-owner lives in the house and you don’t, and you’re the one making the payments. Every co-owner has an equal right to occupy the entire property regardless of ownership percentage, so a co-owner living there does not automatically owe rent to the other.
That changes if the occupying owner actively excludes you, which courts call an ouster. Changing the locks is a clear example. A domestic situation that makes shared living impossible, such as a divorce, has supported findings of constructive ouster in some courts even without physical exclusion. Once ouster is established, the occupying co-owner can be made to pay the non-occupying owner a proportional share of the property’s fair rental value. These rent credits are typically sorted out in the partition accounting alongside the payment credits.
Taxes to Know About Before You Buy Out or Sell
A sale or buyout can trigger capital gains tax, but Section 121 of the Internal Revenue Code lets you exclude up to $250,000 in gain on the sale of your primary residence, or $500,000 for joint filers.9Office of the Law Revision Counsel. 26 USC 121 – Exclusion of Gain From Sale of Principal Residence You have to have owned and lived in the home as your main residence for at least two of the five years before the sale.10Internal Revenue Service. Sale of Your Home If your co-owner moved out years ago, they may not qualify for the exclusion on their share even if you qualify on yours.
A buyout priced below fair market value can also pull in the gift tax. For 2026, the annual gift tax exclusion is $19,000 per recipient.11Internal Revenue Service. Gifts and Inheritances Amounts above that reduce the lifetime estate and gift tax exemption, which is $15 million for 2026.12Internal Revenue Service. What’s New – Estate and Gift Tax A below-market buyout between unrelated co-owners can create a tax filing obligation even when no tax ends up owed.