Buying a property with others is a major commitment, which is why it’s best to create a legal agreement in the form of a property co-ownership agreement. This property co-ownership agreement template is designed to clearly lay out the rights and obligations of co-owners and protect all parties in the case of a dispute.
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The Property Co-Ownership Agreement ("Agreement") is entered into by [Owner1.FirstName] [Owner1.LastName] ("Party") of [Owner1.StreetAddress] , [Owner1.City] , [Owner1.State] [Owner1.PostalCode] , and [Owner2.FirstName] [Owner2.LastName] ("Party") of [Owner2.StreetAddress] , [Owner2.City] , [Owner2.State] [Owner2.PostalCode] ("Parties").
This Agreement will go into effect between the Parties on (DATE) and remain in effect until either Party terminates the Agreement.
The subject property of this Agreement is a (describe house generally, e.g., two-story, semi-detached residential house) located at [PropertyStreetAddress] , [Property.City] , [Property.State] [Property.PostalCode] ("Property").
The Parties shall operate the Property as (state the purpose for which property is to be used, e.g., rental property, personal use, bed and breakfast, etc.)
If you’re planning on using the property for rental income, you’ll likely want to add additional terms and provisions to outline how a rental amount will be determined, how potential tenants will be agreed upon, how the rental income will be distributed, and whether or not there will be an operating budget.
Both Parties agree to hold equal rights, interests, and title to the Property. Both Parties will be equally responsible for the management, maintenance, and financial needs of the house.
Neither Party shall incur any encumbrance of any kind on the Property without the approval of both Parties.
Both Parties agree to maintain confidentiality on all the information shared within the Agreement and not disclose any information to a third party.
The ownership interest might vary based on how much each party pays into the down payment. This will also affect the interest each party has in the property. Make sure to specify the ownership percentage if it’s not an equal 50/50 split.
Both Parties will be responsible for the monthly payment of the Property's mortgage in the amount of $(amount) and the overall loan itself. The mortgage payment shall be split (amount)% for [Owner1.FirstName] [Owner1.LastName] and (amount)% for [Owner2.FirstName] [Owner2.LastName] .
Use our Quoting Software if you want to standardize quote formats and track quote status.
Should the mortgage amount change during the course of this Agreement due to interest rate changes, both Parties agree to continue making payments. If a new mortgage is required, both Parties shall agree to the new terms in writing.
Both Parties agree to report and pay any individual taxes associated with the Property. Property tax payments shall be made (monthly with the mortgage payment, separately in installments, etc.) and shall be split (amount)% for [Owner1.FirstName] [Owner1.LastName] and (amount)% for [Owner2.FirstName] [Owner2.LastName] .
Both Parties agree to pay any insurance and utility fees with a split (amount)% for [Owner1.FirstName] [Owner1.LastName] and (amount)% for [Owner2.FirstName] [Owner2.LastName] .
Should the Property require any maintenance or improvement, both Parties shall agree in writing before hiring any contractors or making any agreements with a third party.
The Parties have agreed to co-own together because of their knowledge of and confidence in each other. Accordingly, no Party shall voluntarily transfer any portion of their interest in the Property except with the approval of both Parties. Any Party may withhold such approval at their sole and absolute discretion. Any purported transfer without the required approval in writing is void.
Approval of both Parties is required in the event of the sale of the Property. Should only one Party wish to sell at any time, they may force a sale with written notice to the other Party. The process would involve getting an appraisal of the Property by an agreed-upon third party and listing it for sale on the market with a professional real estate agent. At this time, the co-owning Party has the option to buy out the share in the Property of the Party who wishes to sell in accordance with the appraised value.
If the Property is sold, the profit shall be divided equally (adjust with the specific percentage of the split if profit is not to be split equally) between the Parties.
When one party wants to sell and the other doesn’t, situations can get complicated or even contentious. It’s critical to have these clauses specifying the exact process to be followed should that happen.
This Agreement and the interpretation of its terms will be under the laws of and subject to the federal and state courts in (City, State).