When you enter into a real estate co-ownership relationship in Santa Cruz, you greatly reduce the risk of purchasing property as an individual. However, there are certain steps you must take to ensure the arrangement is a success, otherwise you run the risk of losing the property you worked so hard to attain or incurring legal recrimination. Landlordology.com explains what you can do to make the endeavor a success.
Make sure responsibilities are divided
Before any decisions are set in stone, the first step is to divide responsibilities. For instance, the property will require some level of maintenance throughout the ownership term and it’s best if you designate who will be responsible for what early on. Financial issues will also factor in, and this entails things like collecting rent, dealing with taxes, and other matters. In the same token, make sure any expenses related to the home are divided evenly.
What are your shared goals for the property? It’s best to have these discussions early on to ensure both you and the co-owner on the same page. As an example, do you want to rent out the property in the long-term or do you plan on living there? Do you want to become the sole owner at some point? When having these discussions is best to be open and honest about what you really want from the arrangement. If there are any conflicts, it’s best to be aware of them now as opposed to later.
Make a determination about the title
You typically have two options when it comes the title in a co-ownership relationship. With Tenants in Common, both owners will hold equal shares in the property. While both parties are free to sell their shares at any time, there is often a first right of refusal clause written into the agreement. This is so a co-owner has the option of buying out the shares to prevent owning the property with a person he or she doesn’t know. Joint Tenants with Right of Survivorship is another option, and this states that upon death that the shares in the property owned by the deceased immediately pass to the co-owner (whereas with Tenants in Common shares are passed on to the person named in the deceased’s will).