Establish your agreement
Outline the ownership structure.
Once you have purchased a property you can go through the process of converting the terms you and your partners have agreed to, into a legal agreement. This agreement will outline the ownership structure including percent ownership of each partner. It will also include the legal relationship between the co-buyers which is also outlined in any mortgage documents.
Generally there are two types of relationships:
- Joint tenants where each owner has equal right to the property regardless of the share contribution to the purchase. This also has rights of survivorship, meaning that should a purchaser become deceased, the surviving purchaser(s) on title will inherit the deceased's interest in the property no matter what a will might state. type of ownership title over the property.
- Tenants in Common where each owner's share can vary and where there are no rights of survivorship. Under this form of ownership, should a purchaser become deceased, their interest in the property will be transferred according to that person's will.
The agreement should include the elements that you deem important from your terms including:
- A plan for how the property will be used
- Ownership over and expected contribution to repairs and maintenance
- The agreed to decision making process
- An outline of agreed upon strategies in unexpected circumstances
- Exit strategies
- Requirement that partners maintain appropriate levels of personal and life insurance
In addition to the terms you agree to, it is a good idea to include an Indemnity clause which enables each partner to seek compensation for any losses caused by the negligence, misrepresentation or misconduct of one or more of the partners.
You can learn more about the legalities of co-ownership at http://www.ilercampbell.com/blog/2017/02/the-how-tos-of-co-buying-resources-from-our-event/