Don’t do it!!!! Would be my first words of advice for anyone who asked me whether it’s a good idea or not to buy a home jointly with someone other than your spouse. However, for some people, it’s the only way they can afford to buy a home. If you share the costs with friends or relatives owning a home becomes more affordable and less stressful.
Top Orlando Realtors report that the problem in today’s real estate market home prices are just out of reach for many people so they pool their resources with friends and relatives in order to make it happen. This allows the homeowner to afford a home that they otherwise wouldn’t be able to afford on their own.
“Neither I nor my brother had enough money for a down payment in a decent Orlando neighborhood,” said one of our buyer clients…” By both of us splitting the costs we were able to buy an Orlando home large enough for both our families”.
Whenever you come to any kind of financial arrangement with friends or family, you should plan carefully to try and avoid any pitfalls that may arise from your agreement. The last thing you want is to damage a personal relationship because of a business arrangement.
Decide How Title Will be Held
How a title to a property is held dictates who is qualified to sign documents as well as what happens when one of the owners passes away. Co-owners that aren’t married can share title to the home as “tenants in common” or “joint tenants with the right of survivorship”. Married couples that are also co-owners via “community property” or “tenancy by the entirety”
If each owner possesses an equal percentage in a property, joint tenants with the right of survivorship apply, with only one title held by all the owners. When one of the owners passes away, his or her percentage gets divided equally between the remaining owners. This goes on and on until ultimately the last surviving owner will own 100% of the property.
The percentages of “tenants in common” may or may not be equal because each of the owners will have a separate title. In this arrangement, there’s no right of survivorship so the property does not transfer to the last remaining survivor. All the co-owners can either pass on their percentage of ownership via will when they die or they can even sell their share of the property at any time. The downside to this way of taking ownership is that the remaining owners may end up being a co-owner with someone they don’t even know…
Similarities between “Tenants in Common” and “Joint Tenants with the Right of Survivorship”
In both of these ways of holding title, co-owners possess equal rights of possession. This means that each person can occupy and use the property. If the property is rented out or leased then each owner receives a portion of the rent in proportion to the percentage they own.
Establish Some Ground Rules
By writing up a co-ownership agreement you can avoid some of the pitfalls that can typically arise from a co-ownership situation. It’s extremely important to determine what the ground rules will be before making any commitments. A co-ownership agreement is basically the pre-nuptial agreement of homeownership. It addresses relevant concerns of all parties involved and specifically lays out what will happen if and when any of these concerns become an issue.
You might think that the friend or relative you’re doing this with will never become a headache or even worse… a nightmare. That’s why it’s so important to have everything spelled out in black and white. These documents are the only way to resolve ownership issues except taking them to court.
