Get a Property Sharing Agreement
Property in New Zealand is increasingly expensive, and many people today are finding it difficult to purchase a home entirely by themselves. It is becoming increasingly common for friends or family members to pool their resources and purchase a home together for them to live in.
This can be a good option, especially if you get on well with the people you purchase with, but there are many scenarios that may occur in which the situation can become difficult, and the rights and duties of different parties can become unclear. Entering into a Property Sharing Agreement when buying a property with others is vital to help avoid such difficulties and protect you and yours if and when circumstances change.
When a property is jointly purchased, the life circumstances of the purchasers may be perfectly suited to sharing the property. But people’s circumstances change. What they want to do with the property may conflict with the interests of other parties, for example if one owner enters into a relationship, or if an owner dies. In such situations, if there is no agreement setting out the terms of the property sharing arrangement, disputes can occur. For example, a partner of one of the owners on their separation or death may dispute the share their ex or deceased partner owned, a child who is not an owner may dispute a deceased parent’s share upon their death, or family members who own together may disagree about if and how to end the property sharing arrangement if one or more parties wish to sell or move elsewhere, or because of a relationship breakdown between them.
To try to avoid such disputes, a good option is for you and your co-purchasers to enter into a Property Sharing Agreement, also known as a co-ownership agreement, and own the property as tenants in common together, each with your own defined shares. A Property Sharing Agreement can set out:
- Who owns what share of the property;
- Who is responsible for what share of the loan repayments and outgoings;
- How the shares can be changed, for example if one party makes a lump sum payment on a mortgage, or if the owner pays for all or some of the maintenance or a renovation, or if one wants to purchase shares from others;
- Cost sharing for repairs; and/or
- Allowances for the sale of the property or shares, including how the price of shares will be determined, timeframes for one owner to buy the others out, and the process for selling the whole property on the market.
In these times, purchasing a property with others can be a good solution to the problem of affording your own home. But to protect yourself and your interests, and avoid stressful and damaging disputes if circumstances change, a Property Sharing Agreement is essential. At Freebairn and Hehir Lawyers we are experts in all matters of property law, so if you are looking to buy alone or with others, we are here to help with whatever you need.