Featured News 2013 Co-buying a Home: What you Need to Know

Co-buying a Home: What you Need to Know

Imagine you are looking at real estate, and locate a stunning home that has all the amenities that you have dreamed of. Unfortunately, it is out of your price range. That is, until dear friends of yours agree that they will help you to purchase the home in a co-buyer agreement. Co-buying homes is legal and possible. For some, purchasing a home with a relative, friend, or associate can be a beneficial way to get a dream house without going out of budget. Still, before anyone embarks on a co-buying arrangement, he or she should look at all of the ramifications of this decision. If you do not think through this carefully, you may be forced into complicated legal situations and may even suffer a broken relationship with your co-buyer.

Whenever you choose to co-buy a home, you will need to decide how you are going to hold the title. The title is on the housing deed, and explains how co-owners are sharing the property. How you list the title of the home could have serious ramifications on the future, so you should think through this decisions carefully. Your options for listing a title with co-owners that are not married to you is to list the owners as tenants in common or as joint tenants with right of survivorship. With a tenants in common arrangement, you will not need to split position of the house 50/50.

Instead, you and your co-buyer will be allowed to own unequal interests on the home if need. Also, if one co-owner passes away, then his or her shares are transferred to that person's beneficiaries. This is the most common way for unrelated buyers to take a title, because each person truly still has their individual share.

With a joint tenants with rights of survivorship arrangement, you and your co-buyer will need to split shares on the property 50/50, and one owner will inherit the other's shares when that individual passes away. Interest is always equal, so if you buy with two other friends then you each will own a third of the home. If you hope to will your home to the co-buyers, then this may be a good option for you. The home will not have to go through the probate process, and will automatically transfer to your assets to the other owners.

Both co-buyer arrangements give buyers undivided interest in the property. This means that both arrangements allow all owners to enjoy the entire property. There is no need to draw a line or determine that one couple owns one half of the home, while others own the other half. If one person wanted to sell the house, then he or she cannot divide the property in half and sell it. Instead, he or she needs to sell the interest in the home to a buyer.

Whenever you are co-buying property, it is very important for you to create a co-ownership agreement, even if the person that you own with is a close or trusted friend. You can never anticipate the arguments or disputes that could arise in the future, and without a co-ownership agreement you may be unable to enforce rules down the road. Co-ownership agreements can be short or long, and can entail all sorts of resolutions to various disputes.

You can hire a real estate attorney to help you draft this co-ownership agreement and help you to make sure that you covered all issues that might arise. Almost all co-owners start the process assuming that there will not be a dispute, but in the future they are often thankful that they took the time to make this arrangement. If you want more information about co-buying or need a lawyer to help you with a co-ownership then talk to a local real estate lawyer today!

Related News:

What Happens If You Don’t Pay Your HOA Dues?

If your condo or home is a part of a homeowner's association (HOA,) you are required to pay dues and assessments when asked by the HOA. If you fail to pay these costs, the consequences are severe. ...
Read More »

What is a Strategic Default?

If you decide to act on a strategic default, you are choosing to stop making payments on your mortgage despite the fact that you can afford to pay them. Normally, people who choose to commit a ...
Read More »

Sewage Leak Lawsuits: What You Need to Know

Sewage leaks can be dangerous, toxic, and damaging. Breathing in the fumes from sewage could cause you to contract a horrible disease, or your plants may die from the harsh chemicals. Just the smell ...
Read More »