WHY YOU NEED A FORMAL CO-OWNERSHIP AGREEMENT AND HOW WE HELP YOU CREATE IT
Most issues with co-ownership partnerships can be avoided if they are addressed before they become issues.
Years of experience have given us insight into most of the concerns people have about co-ownership of a vacation home and problems that might arise sometimes years later.
Using our step-by-step Q&A process, you and your partner can easily create a personalized “Letter of Understanding” that reflects how you want to address almost every conceivable issue that may arise. It’s completely modifiable so that it always reflects how you want your co-ownership to operate.
- What is the exit strategy? What happens if someone wants out? How is the price established?
- How is usage allocated? Who gets preference?
- What happens if one party doesn’t meet their ongoing financial commitments?
- What happens if there are disagreements about level of upkeep or one party doesn’t maintain/respect the property? What if someone breaks something?
- What happens if there are unanticipated major expenses?
- Renting
- Can the property be rented to third parties?
- How would the rental revenue be split? Put all rental proceeds into a common fund or have each co-owner manage and retain their own rental income (and associated expenses)?
- Can either party let friends stay at the property?
- What if there are (major) unexpected expenses?
- Who is going to “manage” the property?
- Maintain bank accounts and records
- Manage rentals
- Manage repairs, cleaning, etc.
Explicitly addressing these, and other “What ifs” in advance is the key to avoiding problems, arguments and misplaced expectations in the future.
When you have completed selecting and modifying your choices, you will be presented with an editable “Letter of Understanding”. It is not intended to create a binding legal document, but rather to give the co-owners the opportunity to discuss and agree in principal to many of the issues that can arise during their partnership. We urge and strongly recommend that in addition to having these discussions, the partners take the Letter of Understanding to a qualified real estate attorney and the appropriate jurisdiction to craft a formal legal agreement. By going through this Q&A in advance you may save tens of thousands of dollars in legal fees and address many issues that an attorney not familiar with co-ownership partnerships might not think to include.
