Things to consider when sharing ownership of a home
Before you experience it, sharing ownership of a home might seem like a straightforward endeavor. You equally pay what needs to be paid and take care of the home as necessary. And, if there are any issues, you deal with them as a team. Simple, right? Well, while this may seem simple in theory, in practice, there can be a ton of arduous situations to tackle, some of which can redefine your living circumstances entirely.
Important things to consider when sharing ownership of a home
When we think of a group of people sharing a home, we usually think of a nuclear family. In this scenario, sharing a home is pretty easy. But, what happens when there is a partner to call the shots? What happens if one owner wants to move out? How are you supposed to split the financial obligations? These are all difficult situations that you need to address beforehand. So, let’s see what can be done.
Who are you sharing with?
Living in a home and sharing ownership of it aren’t the same thing. This is one of the cruel life lessons that siblings often learn after the parent dies. Being the owner of a home means making the necessary decisions to keep it functional. This includes renovation, remodeling, and general repairs. And, besides monetary investment, all of these also require energy and time.
Before sharing ownership of a home, make sure that you talk to the person and ensure that you are on the same page.
If the person you plan on sharing your home with isn’t keen on managing it, you might run into trouble. The smart thing to do here is not to take ownership sharing lightly and discuss possible situations before they happen. Know that it will take time before each of you find their role in the new situations and that you may have to make compromises that you didn’t think of before.
Set ground rules
When you are sharing the ownership of the house, you need to set some ground rules. These rules serve to keep things fair. And to help everyone get their voices heard when decisions need to be made. Depending on what your situation is and how your family is structured, ground rules can vary. But, it is paramount that you have a particular set of rules to follow, even when emotions run high.
If you really want to cement these rules, you should consider binding them in a legal document. This is usually the case when there are multiple owners to property and where one owner can cause considerable harm to others. Real estate litigations can happen, even with shared ownership. And, if they do, you want to have as much legal backing as possible to avoid potential trouble. Ensure that every owner understands the rules to easily abide by them and call upon them.
How will you allocate expenses?
Owning a home costs. Besides your everyday bills, you also need to pay for all the repairs and renovations. After a while, one of you may decide to remodel a specific part of the home. In that case, should one owner pay, or should you split the bill? These are all critical issues that need to be considered and outlined as soon as possible.
It would be best to have a clear plan on how to tackle finances.
A good idea is to carefully study your finances and find a fair way to share the expenses. If both coowners have a similar lifestyle and similar income, it stands to reason that they should pay the same amount. Besides that, you need to clearly outline who should pay for what and when. Know that money issues can turn even the best relationships sour quite fast. So, better to be safe than sorry.
Dealing with disputes
Even with the best of intentions and unselfish compromises, disputes can happen. They happen even if you only live with someone, let alone if you share the ownership with them. To avoid making your disputes a legal issue, you should outline a clearcut way to solve them. If you can find an unbiased arbiter to mediate your conflicts, you can reach agreements that hurt the least. More often than not, it is better to compromise than take legal action, as doing so can be pretty costly.
What happens when someone wants to move out
If you live with people you share your ownership with, time might come when one of you would like to move out. In some cases, they can consider selling their share to the other owner.
The money from the sale will come in handy when covering the moving costs and new home. So, to prepare a budget for this project, it’s necessary to figure out how much the move will cost.
Relocation is something that you need to discuss and tackle as a team.
Also, it will be necessary to find a way to keep finances in check once the person leaves. If they are willing to sell their share, you can work out long-term payments. If they wish to maintain their ownership, you can figure out how much they are supposed to pay for taxes, general maintenance, etc. The smart thing to do is to put everything in writing and to make the document legally binding. That way, there will be no room for any financial irresponsibility.
All things considered, sharing ownership of a home can be a great thing. You can bear any mortgages with less difficulty, and you have a person to fall back on if things get tricky. But, for the co-ownership to work, you need to set clear rules. Legally binding rules help make things clear and avoid difficult situations. Once you have these rules set, you need to work hard on building your relationship. At the end of the day, no rules can save you from the stubbornness and laziness of an unwilling coowner. So, do your part in ensuring that the person you sign the lease with is reliable.