Co-Ownership of Property Agreements
There are many reasons why people may own land together. Spouses and de facto partners often (but not always) hold land as joint tenants, whereas owning land as tenants in common is mostly how other family members, co-investors, or business partners choose to own land together.
This page is not about joint ownership, it is about tenants in common. Tenants in common might hold half of the land each, or they might hold land in different percentages, and a single piece of land can be owned by many co-owners, each holding different percentages. For example, a block of land might be owned by 5 people, where one of them owns 60% of the land, and the other 4 own 10% each.
Each of the owners in a tenancy in common is free to sell or transfer their share of the land to another person during their life or by their will, subject to any agreement between the owners.
If you are buying land with another person who is not your spouse, whether it is a family member, or a business partner, it is important to reach agreement about how the land will be owned and managed. This is referred to as a co-owners’ agreement or land ownership agreement.
What terms should be in a co-owners agreement?
Some typical and important issues in a co-owners agreement are:
- how will the land be used?
- how will expenses be apportioned and paid?
- what happens if one or more owner wants to develop the land, or make changes to the existing buildings or improvements on the land?
- if it’s an investment, how will profits be distributed?
- who is responsible for managing the land?
- what happens if one or more of the owners wants to sell?
- are any of the owners allowed to live on the land, and if so, what rent is payable?
- what happens if there is a dispute between the owners?
- can an owner be forced to sell his or her share in the land?
- how are decisions made regarding the land?
How can Douglas Cheveralls Lawyers help?
The best way to avoid disputes, and to ensure that the co-ownership of the land runs smoothly, is to have a professionally drafted agreement that deals with your specific situation. While it is best to put this in place when the land is first purchased, a land ownership agreement or co-owners’ agreement can be prepared at any time, and the process of preparing and negotiating the terms will often be beneficial, as the owners think carefully about how they want to use the land, and work together to achieve common aims.
Disputes between co-owners of land are quite common, and can be very expensive and disruptive. If you currently own land with others, or are in the process of entering in to such an arrangement, please don’t hesitate to contact us.