You must set aside time to define every aspect of shared ownership, such as usage rights, maintenance, cashing out, and service charges. Covering every possible eventuality at the beginning will ensure no disagreements later on. Also, everyone purchasing the property needs to be doing so for the same reason. Conflicts may arise if some want to make money while others want it to bring the family together.
Don’t rely on verbal contracts. Everything should be clearly defined in writing. There are three main options.
Single ownership – A grandparent or parent might want to contribute significantly more to the cost of the property than the rest and is happy to lead the purchase process.
Joint ownership – Family and friends share ownership. The share of ownership can be unequal, and the deed documentation will list the ownership interests of each party.
Company ownership – A company owns the property, and the family and friends own the property through shares in the company. It reduces liabilities from incidents involving injury at the property and provides additional benefits when dealing with inheritance.
You need to make sure that everyone will be able to pay the mortgage when it becomes due each month. If someone cannot pay, have a contingency plan to ensure the mortgage payments are made on time. Issues paying the mortgage could affect everyone’s ability to get finance in the future. Also, before making the application, you will need to consider everyone’s credit rating. A bad credit rating amongst the group could affect your ability to secure finance.
Probably the most critical and challenging aspect of buying a property together. Set out the tasks and organise them between working groups. If some are best suited for certain tasks, such as paperwork, then possibly make them responsible for that task. Or rotate the duties.
When organising who uses the property, set up a shared spreadsheet, dividing popular times into blocks. Remember to rotate them each year, so everyone has the opportunity to use the property at different popular times.
Inheritance laws vary from country to country. When you purchase the property, your lawyer will be best placed to advise how best to structure your ownership arrangements to manage inheritance situations.
Similarly, your agreement should cover situations where someone wants to sell up, but the rest want to keep the property. The agreement terms might include a provision for not allowing a request to sell the property. Other terms to include might be a provision that prevents anyone from selling up in the first five years of buying the property. When they sell up, the existing owners are first allowed to purchase their share.
We can connect you with property lawyers in your chosen country who will help you safely purchase your dream property without any nightmares and draw up an agreement when buying with family and friends.
We can connect you with property lawyers in your chosen country who will help you safely purchase your dream property without any nightmares and draw up an agreement when buying with family and friends – Contact us