4-plex owners eye partner buyout

DEAR BENNY: I purchased one unit in a four-unit condominium in Florida, and all four owners share equally in the common expenses. The whole building cost $220,000, but the property value has now fallen to under $200,000.

One of the owners would like to quitclaim her share of the property. The other owners have decided to buy her share or take over payments. Since the market value of the property is less than the original purchase price, how do we go about buying her share?

We do not have a written contract regarding quitclaim. Is there a law or penalty that can be imposed on the party who wants to quit? --Syd

DEAR SYD: Either I don't understand your question or you are confused about the concept of a quitclaim, and I believe it is the latter. So, permit me to lecture Real Estate 101.

Oversimplified, there are three kinds of deeds that can transfer property (although different states may use different terminology):

(1) General warranty deed -- this means that the seller (the grantor) is telling the buyer, "I have good, clean title, and basically my chain of title goes all the way back to when King George gave the land to this country";

(2) Special warranty deed -- again, the grantor warrants good title to the property, but going back only to the time that the grantor took title; and

(3) Quitclaim deed -- here, the grantor says, "I guarantee nothing; whatever interest I have in the property I give to you."

For example, I will be happy to provide a quitclaim deed to all my readers for the Brooklyn Bridge: since I have no interest in that property, you get no interest either. Typically, a quitclaim deed is used when one party to a divorce transfers the family home to the other spouse.

So, let's get back to your question. Each of the four unit owners owns a unit in fee simple; that means that you each have good title to the property. One of your owners wants to sell her unit to the remaining three owners. That's not a problem, and the three of you have to decide (a) how to divide up the purchase price and (b) more importantly, how to take title to that fourth unit.

You live in a condominium, not a cooperative. In the latter, ownership is reflected by shares. In a condo, ownership is reflected by title.

I cannot recommend that you all take title by way of a quitclaim deed. If the fourth owner really wants to sell, she should convey the property in the normal way that it is done in your state, which probably is by way of a special warranty deed.

You will have to arrange for a loan, unless you all can pay all cash or arrange with the current lender to take over the existing mortgage. ...CONTINUED

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