Please register to participate in our discussions with 2 million other members - it's free and quick! Some forums can only be seen by registered members. After you create your account, you'll be able to customize options and access all our 15,000 new posts/day with fewer ads.
We are looking for some type of contract that protects the investment. Let's say one person dies (knock on wood) or one person wants out. And a contract that states that we each split the proceeds when the house sells.
A little background:
MY husband and I are investing in a single family home with a mutual friend. We both have investment properties of our own. The house is under his name and credit with the plan to put the next one under both of our names. We both contributed equally for the down payment.
You can be tenants in common with right of survivorship...at least in Oregon you can. Why don't you just hire a real estate attorney for $500 to create a contract for you guys.
We are looking for some type of contract that protects the investment. Let's say one person dies (knock on wood) or one person wants out. And a contract that states that we each split the proceeds when the house sells.
A little background:
MY husband and I are investing in a single family home with a mutual friend. We both have investment properties of our own. The house is under his name and credit with the plan to put the next one under both of our names. We both contributed equally for the down payment.
Thoughts or ideas?
Jess
What you want is a partnership or LLC (Limited liability Corporation) of which the two of you are equal owners, and which spells out exactly how the agreement may be terminated or it's assets disposed. Once it's created, you can use that entity to buy all the properties you want. Talk to a lawyer in your area to create the agreement.
Last edited by Bill Keegan; 01-15-2010 at 09:15 PM..
Reason: typos
No, no. Don't do it! Do NOT invest your hard-earned savings with a "friend" or with a relative other than your husband. Creating such a joint deed is trouble waiting to happen. Here's why ... joint deeds mean partition lawsuits are a right given by law, and no one can stop such an action.
A partition lawsuit is a suit that is filed by a co-owner listed on one of two types of deeds -- a Joint Tenants with Rights of Survivorship (JTWROS) deed or a Tenants in Common (TIC) deed. Partition is a right of each co-owner on the deed, and nothing can be done to stop the process once it is filed. This is something that all persons should be aware of when puchasing joint property and preparing deeds. Any one person on the deed can commence a partition lawsuit to dissolve the relationship and force a division of the property.
When a petition to partion has been filed by a co-owner and acknowledged by a judge, all property owners lose control of the property and they must follow their state's real estate partition laws. Real estate partition law varies from state to state, but the two types of deeds normally mean the same across the board.
Partition means that the property will be physically divided up, if possible, to give each owner a physical, equal share. If a physical division is not possible without spoiling the whole, then the property will be ordered sold and the proceeds divided according the each owner's share. Some states allow an owner the opportunity to buy out the other owners before the property is offered at public sale which is usually a public auction (and usually at a substantially lower cost) Some states also allow multiple owners to combine their shares to form a majority ownership to avoid a public sale.
A JTWROS deed always means that all owners automatically have equal shares in the property, so proceeds must be divided equally among the tenants during a sale or during a partition of the property. So if four tenants are listed on the deed, each tenant owns a 25% share of the property. There is no way to change that regardless of any one tenant's contribution to the purchase price. During the partition process, credits may be issued for payments made to utilities or maintenance, but no credit would be issued for any one tenant's contribution to purchase price.
If the deed is a TIC deed, then shares could be unequal which may result in an unequal distribution during a sale or partition. Just as with a JTWROS deed, credits may be given for utilities or maintenance payments made in excess of one tenant's share. In both instances, credit may be given for rennovation and upgrades only if such actions resulted in an increase in property value.
After the partition process is over, the tenants will be responsible for the costs of partition according each tenant's share of ownership. Costs may include attorney fees, court fees, court master fees, appraisal fees, etc.
Needless to say, the way you take title to a property can affect your future and your finances. Be very careful when taking deed to jointly owned property. One owner can force all others out into the street and create financial turmoil. If you MUST invest with this person, speak with a local attorney about forming an LLC.
Please register to post and access all features of our very popular forum. It is free and quick. Over $68,000 in prizes has already been given out to active posters on our forum. Additional giveaways are planned.
Detailed information about all U.S. cities, counties, and zip codes on our site: City-data.com.
Please register to participate in our discussions with 2 million other members - it's free and quick! Some forums can only be seen by registered members. After you create your account, you'll be able to customize options and access all our 15,000 new posts/day with fewer ads.
