Legals & contracts

Legals & Contracts

There are a few of vital contracts that you need when co-buying, these are for your and your new co-buying buddies protection. So please read through the following.

1.   Co-Ownership Agreement for Property
2.   Co-Habitation Agreement
3.   Will
4.   Costs

1. WHAT IS A CO-OWNERSHIP AGREEMENT FOR PROPERTY?

A Co-Ownership Agreement for Property is a legal document which records the intentions and purposes of the co-buyers and the background to the property being purchased. A Co-Ownership Agreement for Property helps to protect all co-buyers interests in the event that relations between the parties should sour or to outline the overall financial arrangement of all co-buyers. It covers many areas such as investment amounts of the different parties, responsibilities, authority, etc.

A Co-Ownership Agreement for Property stipulates the shareholding each co-buyer has within the property. That shareholding can be either equal or unequal depending upon the agreement that is reached between the co-buyers. If the property is co-owned in this way and one co-buyer dies the deceased co-buyers share will pass in accordance with the terms of that persons Will (see below) or under the rules of intestacy if no will has been made. Because the property is co-owned it is prudent to specify how the proceeds of any sale would be divided and that no co-buyer has the authority to sell without agreement from the other co-buyers!

(Intestacy def: 'the act of dying without a legal Will', Commentary: In case of Intestacy the government will assume responsibility & determine the method by which assests will be divided.)

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2. CO-HABITATION AGREEMENT - The terms of your relationsip

A co-habitation agreement allows all the co-buyers to document how they shall behave, who takes ownership of what items when the property is sold, basis for opening a joint bank account, having or not having pets, having friends sleep over...

More official elements you might want to include are things like: all maintenance fees, bills, insurance costs are split equally, everyone has to pay rent if they are living in the property, if you ever sell the property, are their any terms attached to it and how will the profits be split (usually pro-rata based on shareholding). It is better to include as much as possible than leave it out. Additionally each co-buyer should seek seperate legal advice and sign the agreement when everyone is happy with it infront of a witness which will make it all the more binding and legal.

In fact you can include pretty much whatever you want within reason and if acceptable to all the co-buyers, but the main thing is to be fair and flexible with the agreement as you will all have to live by the same rules.

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3. YOUR WILL - Is our command!

The Co-Ownership Agreement for Property will endure after the death of either co-buying party and therefore the personal representatives of the deceased co-buyer may exercise the rights of the deceased. The Co-Ownership Agreement for Property must be recorded as a restriction on the title documents in order to prevent one party selling without the knowledge of the other. The Co-Ownership Agreement for Property is also severing the joint tenancy arrangement and therefore the personal representatives of the deceased party must deal with their share according to the terms of their Will, or, if there is no Will, the rules of intestacy.

A will is vitally important as you are then able to dictate what happens with your assets in a way not necessarily covered by the rules of intestacy.

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4. TENANTS:

Tenants in Common: The interest in the property of each co-owner or Tenant in Common is separate and distinct from the other co-buyer. As such the shareholdings do not have to be of equal share/size and can be split between more than two co-buyers.

All tenants are at liberty to manage their own share independantly - so if you want a say on who buys someone elses share, you better include a clause in your contracts.


Joint Tenancy: This is very much based on total ownership of the whole property without any definition of different shareholdings or investment sizes of the co-buyers and is limited to two co-buyers only. In dealing with third parties joint tenants must act as a single owner.


Summary: If you are not related we believe you are safer with the Tenants in Common - but again; always seek legal advice before signing or agreeing anything!

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