What to Do If You Want to Co-Own

Buying property with a co-owner requires a lawyer’s help, a comprehensive legal agreement and clear understanding of tax laws regarding real estate, experts say.

Bruce McBirney, a partner in the law firm of Thorpe & Thorpe, said he recommends co-ownership only if the following fundamental precautions are taken:

Each co-owner must have confidence in the other’s goodwill, integrity and ability to get along, qualities that are worth more than any words put down on paper by a lawyer.

The parties involved should consult a lawyer to guide them through a clear, specific co-ownership or tenancy-in-common agreement.

McBirney recommends tenancy-in-common agreements, where co-owners own undivided interests in the whole property as opposed to a joint-tenancy agreement where, if one party dies, the deceased person’s interest automatically passes to the surviving joint tenant.

Co-owners should document when they plan to sell, what events would trigger the obligation of both parties to sell (like both parties losing their jobs) and include co-owners’ first rights to buy each other out.

McBirney recommends writing in a waiver of the right to bring “Action for a Partition,” a legal motion filed by one co-owner against the other to force sale of the property or subdivide the property (assuming the property could legally be subdivided).

Clarify what rights the parties occupying the units will have, such as communal areas or areas that are exclusive to either party.

Articulate each co-owner’s share of the cost of maintaining the property, such as fixing roofs, plumbing and other unexpected repairs and paying property taxes. Set out specifically what will happen if one party fails to make mortgage payments and what happens if one party is continuously paying to fix things up.