If you are planning on purchasing a property with someone else, like a business partner or a family member, it`s important to understand the different types of ownership agreements available. One of the most common agreements is a “tenants in common” legal agreement.
So, what exactly is a tenants in common agreement? It`s a legal agreement between two or more individuals who own a property as co-owners. Each owner in this agreement holds a separate and distinct share of the property, and they are not required to have equal ownership. For example, one owner may hold a 70% stake while the other holds 30%.
This type of ownership agreement is often used when co-owners have different investment amounts or when they want their estates to go to different beneficiaries. In the event of one owner`s death, their share of the property automatically transfers to their designated beneficiary.
It`s important to note that tenants in common don`t have to live on the property simultaneously. Each co-owner has the right to use and enjoy the entire property, regardless of their ownership stake.
One of the advantages of a tenants in common agreement is flexibility. Co-owners have the freedom to sell or transfer their share of the property to anyone they choose, without consulting with the other co-owners. This can be beneficial for one individual who wants to sell their share or for estate planning purposes.
However, it`s important to carefully consider a tenants in common agreement before entering into it. Co-owners may have different visions for the property, which can lead to disagreements. There may also be different opinions on maintenance and repair costs.
To avoid potential conflicts, it`s important to have a clear and comprehensive legal agreement. The agreement should outline the ownership percentages, the process for transferring shares, and the distribution of expenses. It`s also a good idea to consult with a real estate attorney to ensure that the agreement meets legal requirements in your state.
In conclusion, a tenants in common agreement is a flexible and commonly used option for co-owning a property. However, it`s important to have a thorough legal agreement to avoid potential conflicts or misunderstandings. Always consult with a real estate attorney to help you navigate the legal requirements of a tenants in common agreement.