Blue Ridge Real Estate

This is a term that applies to the practice of buying a house or investment property with a partner (the term would of course not apply to married couples). Otherwise we could refer to this concept as co-ownership of real estate. Consider the situation where an individual could qualify for buying a lesser house, but he would rather enjoy a much richer atmosphere. Is it possible for him to do this in the immediate future? He certainly could through an equity sharing strategy, but like going in to business with a partner, he should carefully consider the individual he proposes to do this with.

This arrangement could work in a number of different ways. Perhaps two individuals (or actually more) want to share the home, using their individuals as separate domains and the kitchen, living rooms as community areas. It s good to remember that some residential floor plans are more conducive to this arrangement than others, and regardless of the individuals, some are simply unworkable. On the other hand, maybe the prospective owner simply asks a friend who is otherwise situated with a home to invest in the deal. The second individual then becomes an equity share partner who assumes liability in the project, contributes to the front end expenses and then probably takes a stream of income out of it, together with a share of profits when the house is sold at a future date.

Such situations are fully functional but here indeed is a need for proper legal counsel and guidance by a professional experienced in these matters. All such parties to this transaction need to agree upon many particulars as to the terms of the agreement between them and should be advised about the ramifications of the partnership.

Two or more individuals commonly share housing and do so in an agreeable manner, parting on good terms after significant lengths of time. But there are enough added considerations here to make this type of situation entirely different. And all of these matters should be thought out ahead of time and written agreements made and signed between them. An oral agreement between once-good friends is asking for trouble. Here are some matters that need agreement beforehand:

• How will title to this property be held?
• How will the two or three of you cut this house up?
• What will be the house rules? And how are you to make decisions in case of trenchant disagreement?
• Who is to be the superior or managing partner?
• How long of a term is this investment to last?
• What shall happen if one party elects to pull out at some point, or is transferred? Or dies? What about default? How would you go about selling out?
• Who will handle the monthly disbursements and book keeping? Who pays what rent? Utilities? Maintenance costs?
• How will business meetings be called and conducted?
• What percentage of ownership in this Equity Sharing will each have? How will the eventual profits or losses to be distributed?
• How will income tax benefits be shared between you?
• How are the front-end costs to be divided?

One good piece of advice is to rent another piece of property with this individual to see if the two of you are compatible in temperament and lifestyle.