What is co-ownership?

Question: Dear Kari, My husband and I were having dinner with our closest friends, and our conversation turned to homeownership. We all share the dream of owning a home with a yard and garages we can truly call our own. We agreed apartment living had run its course. We all have great credit and together we could afford a good-sized home. However, we all lack knowledge about this topic. Could you please offer us some insight? Answer: Thank you for this great and frequently asked question. Friends and family members who wish to purchase a home together are common examples of borrowers who choose a co-ownership mortgage to finance a property. In a co-ownership arrangement, the home is jointly owned by two or more individuals with all owners listed on the title. Each party holds a defined ownership interest in the property. In some cases, this can make a better financial decision to combine finances with other buyers to share the costs of buying and enjoying the benefits of a home. This concept has recently become a more popular solution for folks who desire to own their home and are not able to finance a home themselves. Some different types of co-ownership in real property include: · Tenancy in common. Each owner has an equal share of the property. So, in the case of dual owners, each owner would acquire a percent share of the property. · Joint tenancy common. This affords the right of survivorship. In this event, the deceased person's share of the property is automatically transferred to the other joint tenants. · Tenancy in entirety. Good to note, this is only available to married couples who will own jointly together. It is best to create a co-ownership agreement before your purchase. This way, everyone will be on the same page. In your agreement, it would be wise to draw up all the details of the rights and responsibilities of everyone involved. All parties can be creative and extremely detailed in this agreement. It is crucial that the documents spell out all the particular details; otherwise, you may find yourself in an undesirable situation in court. At this point, it is common that everyone is over the top with excitement of finally owning a piece of the pie for themselves. However, at this time, it would be advisable for all parties to get the details ironed out up front and included in the contract. The contract will spell out who has what percentage of ownership and how the expenses will be divided among owners. Here is the big topic, what happens when one of the owners wants out of the deal? Usually, in this event, the other owners are not required to sell. It would be wise to have a plan well in advance in writing to address this possible issue. Surprisingly, statistics show folks who have chosen to work with co-ownership have gone on in the future to purchase other properties on their own merits. This co-ownership has been known to be a good stepping stone for some folks to climb upward and onto their own individual pride of homeownership. This information is believed to be true and is used only to answer a question. For further information, contact your real estate agent or your attorney. Kari McCoy, CRS has been a Realtor for 30 years and owns the Kari McCoy Group, Residential Real Estate at Windermere Real Estate. She can be reached at 916-933-5274 or email her at sold@karimccoygroup.com. #00841588