Recent media headlines suggest that property ownership sharing arrangements may become a growing trend in Auckland. While inter-generational property sharing arrangements are not new it is suggested by some commentators that property sharing amongst friends is on the rise. Whether or not the sharing of property ownership is between family, friends or investors the importance of agreeing the terms on which the shared property is held prior to entering into the relationship is of significant importance.
As always, whether we are talking about property sharing arrangements or entry into a new business venture, the parties involved are always on the best of terms prior to commencement of the new venture. It can be difficult at such times to contemplate or even identify issues that may cause a disruption to the parties relationships and eventuate in an intractable dispute.
Like death and taxes, disputes are a natural and inevitable part of life. Parties considering entering into a property sharing arrangement should consider the following matters before “jumping in the deep end”.
- Each parties ownership share to be recorded on the certificate of title.
- The share that each party will pay for maintenance and improvements and how the parties should manage any disagreement as to what improvements are required.
- What process should be followed if any of the parties wish to sell.
- What rules will apply to resolve any dispute between the parties in connection with the shared ownership.
Any agreement with respect to the above matters needs to be documented clearly and concisely in plain English. A well drafted Co-owners’ agreement can act as a manual or guide which may be consulted by the parties if a disagreement is reached between them. Having such a document in place can help prevent feelings of unfairness or a protracted dispute process as the steps required to be taken are set out in black and white.
If the media reports concerning a growing number of shared property ownership arrangements are correct then lawyers may expect more work in relation to the resolution of disputes between co-owners. Our preference at Franklin Law however is not to be the ambulance waiting at the bottom of the cliff. If you or anyone you know is considering any form of shared property ownership we strongly recommend that you speak with us about a co-owners’ agreement before you do.