Creating Your Legal Agreement: An Introduction

Your legal agreement is an essential part of the co-ownership real estate purchase. It may feel daunting or uncomfortable to discuss certain aspects of your living arrangement through the lens of a legal agreement, but we believe that in most cases, it is better to have it and not need it, than to need it and not have it. Your Legal Agreement is in place to protect you and your group, both individually and collectively.

You can include many commitments and scenarios in your Legal Agreement. What’s important is that your arrangement is clear, contingencies and changes are discussed, and their outcomes are agreed upon. Every purchasing group is different, so please seek the advice of a lawyer to ensure that you have the best agreement for your group.

Why Is It Highly Recommended to Have a Co-Ownership Legal Agreement?

A legal agreement between co-owners provides assurance and guidance around remedies. Simply put, it outlines what the owners agree will happen if decisions or agreements made by the members of a purchasing group are not, or cannot, be honored. Without an appropriate legal agreement in place, a co-ownership group could lose control of their home or face unresolvable disputes among members.

Consider this example:

A group of four senior women lives together in a four-bedroom home. One of them dies suddenly. Her share of the home passes to her daughter, who decides to rent it to a stranger. Because they do not have a proper legal agreement, the remaining group members lose control over who lives in their home.

Another example:

Two married couples purchase a home as a group. One of the couples decides to divorce. One member of the couple would like to remain in the home as part of the group, but the shares of the home are considered a joint asset and must be liquidated. The strain and unanticipated legal fees result in all parties abandoning the agreement and selling the home.

Legal agreements for co-ownership of real estate can be created to prevent these situations from arising. They are customized contracts that accommodate the wishes of all members of the purchasing group and outline what will happen in future scenarios.

Next Steps

Read the next section on the different types of legal arrangements and which we think are best for a co-ownership real estate purchase.

Before looking at homes, I always ask that groups become familiar with ‘tenants-in-common’ law or have had a discussion about how to handle fractional ownership if one partner changes. — Lesli Gaynor, Co-founder of Husmates

How Do You Create Your Legal Agreement?

Click on the sections below to learn more.

1. Creating Your Legal Agreement: An Introduction
2. Creating Your Legal Agreement: Understanding Joint Tenancy and Tenants-in-Common
3. Creating Your Legal Agreement: Rights and Responsibilities
4. Creating Your Legal Agreement: Defining Financial Obligations
5. Creating Your Legal Agreement: Planning for Future Scenarios
6. Creating Your Legal Agreement: Essential Legal Steps and FAQs

Finding A Lawyer and Frequently Asked Questions