Thinking of buying a home with another?
Purchasing a home is a significant investment, and with a housing market on the continued rise (dips aside), it is often not something that can be done alone.
More and more we are seeing people pool their money together with friends, family members and partners to purchase a home. In these various situations, it is important to have a clear understanding of the rights and responsibilities of each party with respect to the shared property.
To achieve this clear understanding, we recommend entering into a property sharing agreement. A property sharing agreement is a binding legal document that outlines the terms of ownership and use of a shared property.
It can cover various issues, including the division of expenses, responsibilities for maintenance and repairs, plans for distribution of expenses or profits and sets out the intended use or limitation of the property.
A property sharing agreement also helps to prevent misunderstandings or conflicts from arising and provides methods for resolving disputes that may occur. Whilst no one sets out with the intention of encountering a dispute with someone they want to share a home with, having a way to deal with issues in an agreed manner will certainly assist in maintaining the relationship.
Benefits
There are several benefits to having a property sharing agreement in place, these include:
Clarity of ownership: A property sharing agreement clearly defines the ownership rights of each party. It can help to avoid any misunderstandings or disputes in the future if one party decides to sell or transfer their share.
Protection of interests: It can help protect the interests of each party by outlining their rights and responsibilities in relation to the property. Carving out each party’s respective interests at the outset helps to ensure everyone’s needs are met. Any issues that arise can be resolved amicably by reference to the terms of the property sharing agreement.
Financial stability: A property sharing agreement can help to ensure parties maintain a degree of financial stability when buying a home by sharing the financial burden of buying a home. This helps to prevent financial strain on any one party, which can help to ensure the stability of the ownership agreement.
Legal protection: a property sharing agreement can provide legal protection to all parties involved in the event disputes arise.
Thinking about a property sharing agreement?
Property sharing agreements are not limited to first home buyers, rather they are advisable in circumstances where two or more people intend on sharing a piece of property. This could include sharing:
a holiday home or classic kiwi ‘bach’;
a rental property, apartment or unit;
a business premise, office or workshop; and
a storage unit or garage.
In any of these situations, a property sharing agreement can help to establish a clear understanding of each party’s respective obligations and prevent conflicts from arising.
If you’re considering purchasing with a friend or family member and don’t know where to start, book an appointment with one of our lawyers to discuss what options might best suit your needs.
Receiving a financial contribution from Mum or Dad?
It is becoming increasingly common for Parents to either lend or gift a financial contribution towards their child’s property purchase. This is usually done through either:
gifting or lending the deposit;
acting as guarantor; or
purchasing together.
Much like the Property Sharing Agreement, how the financial contribution is structured can have a significant impact on whether it remains your separate property or becomes a joint relationship asset.
To read more about how parties can help kids ‘get on the property ladder’, check out our blog here.
Want to know more?
We offer FREE one-on-one consultation with one of our expert property lawyers through our online scheduler. All of our consultations can be carried out in person or via Zoom and carry absolutely no obligations for you to engage with us – we will even throw in a free coffee if we meet in person.