Investigating a “tenancy in common” could be a viable option for many first-time home buyers that are attempting to address the challenges of buying pricey homes on the North Shore. Many first-time buyers are being priced out of this market because they are unable to save the huge down payment or qualify for a mortgage. One solution to these problems is buying a home with a suite or a coach house or to co-buy a home with with friends or family. Some people call these "mixed mortgages”. The best way to describe it would be a tenancy in common.
Things to consider when setting up a TENANCY-IN-COMMON**
(**this is not to be construed as legal advise – you MUST CONSULT a LAWYER for proper advise and to determine your unique situation)
A legally binding document needs to be drafted that covers all of the different circumstances that may arise. This partnership or joint venture agreement should cover at least some of these basics:
- Who pays for the purchase and maintenance of the house, and how ownership is divided.
- Sales agreement in case one side wants to sell their share.
- How the property will be divided if the friends/family decide to separate or if one person dies.
- Enclose a first right of refusal clause into the agreement so whoever wants to stay has the ability to own the entire residence.
- Regardless of who you’re buying with, whether a friend or sibling or parent, you must consult a lawyer and draft legal papers.
- Pay attention to unbalanced arrangements at the outset. For example, if you’re contributing 100% of the down payment but the two parties will be splitting the expenses, you might want to be clear in your agreement that your down payment should be returned to you upon sale before profits are split.
Read an additional article on building a "COACH HOUSE" on the North Shore for even more options...CLICK HERE...
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