Knowledgeable Real Estate Lawyers Drafting Co-ownership Agreements in Vernon & Salmon Arm
Given today’s ever-increasing real estate prices, it is becoming more common for people to share the purchase of a home with other adults who are not their spouse or partner. For single people, in particular, this can be an excellent way to enter the real estate market without the need to fund a purchase on their own. While owning a property with a friend or family member can be extremely advantageous from a cost perspective, there are also a number of risks and practical considerations that anyone contemplating this arrangement needs to take into account.
One way to pre-emptively address potential co-ownership issues is with the creation of a co-ownership agreement. Much like business partners will enter into a partnership agreement when starting a business, a co-ownership agreement sets out each party’s responsibilities and obligations, the processes for handling eventualities such as the sale of the property, and the resolution method for potential disputes. Addressing these factors through a legally-binding document grants certainty and peace of mind for all parties and can also help to avoid costly litigation down the road should a disagreement arise. With a co-ownership agreement, the important considerations have already been decided and agreed upon, providing reassurances to all owners from the start.
Friendly and Accessible Real Estate Lawyers with a Wealth of Experience
The real estate lawyers at Cherkowski Marsden LLP have a great deal of experience drafting and reviewing co-ownership agreements. We will review the particular circumstances of your situation and provide practical and clear advice on how best to structure a co-ownership agreement that fully contemplates the present and future interests of each party. Our lawyers pride themselves on our open and honest approach with clients, ensuring that they are completely informed about all aspects of their transaction. Clients leave our offices feeling relieved that their concerns have been addressed and confident that their interests are protected.
Co-ownership Structure: Tenants in Common vs. Joint Tenancy
The parties will need to decide how they want the ownership to be structured. When a couple purchases a home, the standard form of ownership is joint tenancy, however in a co-ownership situation, tenants in common is generally advised. The primary differences between the two relate to the flexibility in terms of the share of ownership and how each person’s ownership will be dealt with in the event that one party wishes to sell or passes away.
Tenants in Common
In a situation where parties are looking to share a property with individuals who are not their spouse or partner, tenants in common is the recommended approach to ownership. With tenants in common, the owners can apportion shares of the property based on financial contributions or other determining factors. For example, if one person is paying 70% of the cost of the home, the ownership can be structured so that they own 70% of the property and the other party owns 30%. Further, each share is owned independently, and can, therefore, be sold independently or passed down to beneficiaries in a Will. It is also recommended that a right of first refusal clause be included, requiring any owner wishing to sell their share to offer the chance to purchase it to the other owners before considering any third parties. This would also apply to the estate of an owner should they pass away.
In a joint tenancy agreement, each party is an equal owner in the property. Each name on title is entitled to an equal share in the proceeds upon sale and it cannot be apportioned otherwise. Parties to a joint tenancy also cannot sell their share of the property independently – the other owners must either buy them out, or the entire property must be sold. Lastly, and perhaps most importantly, if one party in a joint tenancy dies, the ownership of the property transfers by right of survivorship to the other party or parties on title. A joint tenant may not leave a share in the property to other beneficiaries in their Will.
What is Covered in a Co-Ownership Agreement?
In addition to the structure of ownership, a co-ownership agreement set out legally binding terms that address a variety of factors, including:
- Expenses – how will they be divided, and which parties will cover which costs;
- Property maintenance;
- In cases where the property will be rented out, how such rentals will be handled;
- Property insurance;
- Mortgage structuring;
- How a sale will be dealt with;
- The consequences of a default by one or more of the owners;
- When and how the co-ownership will be dissolved and;
- The preferred method for dispute resolution.
The lawyers at Cherkowski Marsden LLP work with each of their clients to design a co-ownership agreement that is custom-tailored to suit their needs and thoroughly addresses the concerns of all parties. Ideally, these agreements will be entered into prior to or concurrently with the closing of a real estate purchase, however, they can be created even after the property has been purchased.
Carefully Considered Advice and Drafting of Co-Ownership Agreements
Contact the experienced real estate lawyers at Cherkowski Marsden LLP in Vernon & Salmon Arm for trusted legal advice and guidance with respect to your co-ownership agreement. We have over 50 years of combined experience in real estate matters, and we can help ensure a harmonious joint venture with practical advice and meticulous contract drafting. We look forward to working with you to help you to achieve your goals in bringing certainty to your homeownership arrangement. You can reach us online or by phone at 250-308-0338 (Vernon office) or 250-803-9171 (Salmon Arm office).