If you are thinking about creating a real estate co-ownership agreement then you may have already purchased a home, are on the home search or getting ready to close on the purchase of a home and are trying to figure out the complexities of home ownership with a partner that you are not married to. These types of arrangements are becoming more and more popular as real estate prices continue to soar in the Seattle metro area and Washington State and parties need to pool their resources in order to make a real estate purchase. Attorney Richard Symmes discussed whether you should create a Real estate co-ownership agreement with your partner on 1150am KKNW radio and you can listen to the segment here:
This conversation as to whether to create a co-ownership agreement can come up between friends, family, business partners or life partners who are not married as there are numerous issues to discuss that parties may not think about when they purchase real estate. A co-ownership agreement can define all of the rules ahead of time so that there will be no conflicts between parties should there be a breakup, should one party want to sell or should one party pass away for example.
How Should We Take Title to a Property When we Purchase?
If you are married and purchasing the property you will likely take title as husband and wife as the purchase will be community property unless you have a pre or post nuptial agreement. This would mean that the parties will own the property equally and will have equal rights and should something happen to one spouse the surviving spouse would own the property.
If you are not married then you will likely be taking possession of property has tenants in common, this means you will have equal rights unless otherwise defined and your interest in the would pass to your next of kin should something happen.
What Should a Co-Ownership Agreement Include?
A Co-Ownership agreement for owning real estate can include anything you want it to as its your agreement but some of the most important items to discuss and possibly include in your agreement:
- How much is each party contributing to the real estate transaction?
- What are the ownership percentages of the real estate?
- How will the monthly mortgage payments, taxes, HOA, repairs and utilities be paid?
- What happens if one party wants to sell the property? Does the other property get to purchase the remainder? At what property Value? What If both parties want to sell?
- What will happen if one party is unable to make their share of the mortgage payment or expenses?
- What will happen if one party wants to refinance the mortgage to get equity out?
- Who will be responsible for the maintenance and upkeeping of the property or costs associated with that?
- What happens if one party or both want to rent out the property. How will profits be split and expenses paid?
- Who gets to use what parts of the house? Are there house rules?
- How will disputes among partners be resolved?
- What happens if one party passes away? Does the property go to the other patterner(s) or to the next of kin?
What if we Can’t Agree on Terms to Purchase Real Estate?
If you cannot agree to terms with regards to the real estate purchase then it may be best to not purchase at all as all sorts of issues can come up and be costly and more hassle than it is worth. With that said, home ownership is the American dream and can be a great investment, building equity and paying your debt down over the course of several years. As a rental real estate can also give you great tax benefits so owning with a partner can be a great opportunity.
If you live in Washington State and are thinking about drafting a Real Estate Co-Ownership Agreement, give Symmes Law Group a call at 206-682-7975 or contact us to get the counsel you need.
