With property prices remaining challenging for many New Zealanders, more people are choosing to purchase property with friends, siblings, parents or other family members.
While sharing ownership can help people get onto the property ladder sooner, it can also create significant problems if expectations are not discussed from the outset.
Many co-owners focus on the excitement of buying a property and assume they will simply work things out later. Unfortunately, disputes often arise when circumstances change.
What if;
- one owner wants to sell and the other does not?
- one person contributes more towards mortgage payments or renovations?
- one owner loses their job, enters a relationship, separates from a partner, or wishes to move overseas?
These issues can quickly become complicated and expensive if there is no clear agreement in place.
CONSIDER THE FOLLOWING EXAMPLES.
Two friends purchased a home together. Several years later, one is relocating for work and wants to sell. The other wishes to remain in the property. Without a prior agreement, the dispute
may require negotiation, mediation or even court proceedings to resolve.
Well-meaning parents wanted to help a child to purchase property and gave them a substantial amount. The arrangement wasn’t documented and there was a subsequent falling out
within the family as to whether the parent’s contribution was intended to be a loan, a gift, or to create an ownership interest.
Failing to address these types of situations carefully can create difficulties later, particularly if relationships change or an estate administration becomes necessary.
A well-prepared Property Sharing Agreement can usually deal with ownership shares, contributions, expenses, decision making, dispute resolution processes and exit arrangements.
Having these discussions at the beginning may feel uncomfortable, but it is often far easier than trying to resolve disagreements after significant money has changed hands and emotions have become involved.
If you are considering purchasing property with another person, obtaining legal advice before signing an agreement may help protect both the relationship and the investmen
