Do you Know Which Contract is Suitable When Buying With a Friend
There are two kinds of property ownership contract – joint tenancy or tenants in common. Do you know which is more suitable if you are buying with a friend or business partner and which is better if you are buying with a spouse?
Usually when more than one person buys a property, they do so with a spouse. But with the price of real estate these days in most major cities, more and more people are opting to buy with a friend or business partner, either to live in together or to rent out as an investment.
The two types of contract available are Joint Tenancy and Tenancy in Common. Both types of contract allow for the owners to sell their share of the property to someone else, but they are different in other ways.
As a joint tenant you are entitled to possession of the entire property, but if you die, your joint tenant automatically owns the property no matter what your will says. Therefore this type of contract is normally only used by people in a close relationship.
If the contract specifies that you and your co-owner are Tenants in Common, it means that you can leave your share to a friend, child or other person in your will. This form of ownership is suitable for people making a business venture, or for friends who are using shared ownership as a means of getting into the market at a lower figure than if they were to buy a whole property by themselves. The arrangement can be 50/50 or any other ratio that works for you.
Note: Always obtain your own individual legal advice as it relates to your specific circumstances. This article is intended to be general advice only.