Creating Your Legal Agreement: Essential Legal Steps and FAQs

Creating a solid legal foundation is key to successful co-ownership. Once you've established your group's legal responsibilities, financial obligations, and future scenarios, the next step is finding a lawyer experienced in drafting co-ownership agreements.

It's essential that all members of your purchasing group collaborate on the agreement and share the contents of any wills or spousal agreements with your lawyer. This ensures alignment and addresses future scenarios effectively.

Sharing your will with your co-purchasing group might feel intimate, especially if the relationship is new, but transparency is crucial for creating comprehensive legal agreements that consider the future of your home together.

Here are some frequently asked questions to help guide your group through this process:

Frequently Asked Questions

Do I need a purchasing group agreement if I'm buying property with family?

Yes, a legal agreement is recommended even in the most trusting relationships. For families, the agreement can outline each member's percentage of ownership. If the family members have children, it provides clarity on each child's share.

How can we maintain control over who buys next if a member exits the agreement?

The legal agreement should be a tenants-in-common agreement and clearly state the process for member exit. It should define:

• Approval rights, such as the right of first refusal for selecting new members.
• The obligation to find a new member, usually the responsibility of the exiting member.
• The allowed time for the transition.
• The required process details, such as the use of a registered realtor.

What happens if a couple co-owns a property and one wants to leave? How do we get our money out?

The home will be considered a ‘matrimonial home’, and the asset will be divided like other joint assets in a marriage. Married couples should enter into a tenants-in-common agreement as individuals, not as a couple, to address such events. These rights can also be outlined in a marriage contract.

What are the advantages of a tenants-in-common agreement?

This agreement allows specificity about how a member’s share of the property is handled in various circumstances, such as death, divorce, or default. It's the preferred agreement for co-ownership real estate purchases.

When would you choose a joint tenants agreement?

A joint tenants agreement is suitable for uncomplicated, close personal relationships, like siblings, who are comfortable with joint ownership. When one partner dies, the remaining members inherit the share without it going to an estate.

How can we prevent a member’s estate from inheriting their share of the house?

Ensure you have a tenants-in-common agreement that specifically addresses what happens to a member's share, especially regarding rights of first refusal for the remaining members.

Key Questions for Your Lawyer

• What are the names of everyone on the property title?
• Will anyone use the property who is not on the title?
• Is any portion of the property used for non-home purposes, like a business or art studio?

That’s the end of step 4. Coming soon is Step 5: Finding Your Perfect Property - the final step in the process of a co-ownership real estate purchase!

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