If you've always dreamed of owning a property but could never afford the down payment or qualify for the right level of mortgage, then you may have decided to team up with another individual instead. In this case, you may be able to pool your resources so you can put more money down and raise a mortgage for the right type of property. Yet you will want to make sure that all the paperwork is in order before you proceed. What do you need to consider?
Co-Owner's Agreement
When an individual buys property on their own behalf, they should always engage the services of a conveyancing solicitor. This will help ensure that all the appropriate documentation is raised or filed, as and when needed. However, when they enter into a contract with somebody else, there is even more to consider, and they should think about drafting a co-owner's agreement at the outset.
Handling the Future
This type of agreement will clearly document what both of these individuals want to happen in the unfortunate event of a dispute. After all, life moves on and it's very difficult to predict the future, so if one of them wants to sell but the other one doesn't, then this type of scenario should be outlined in the documentation.
Within this document should be the rights and obligations of each party with regard to the ongoing maintenance of the property and, in particular, with regards to any sizeable financial outlay that may be necessary in the future. They should also discuss how to handle any ongoing mortgage, how each party should contribute to that cost and what should happen in the event of a default.
Investment and Tax
If both of them consider this to be an investment, then they should get the appropriate tax advice as well before they sign the contract. They'll want to create the best tax vehicle, and this may require some careful work if one of the parties is in a higher tax bracket than the other. In this case, they may want to register the investment as 'tenants in common', while allocating unequal shares based on tax liability.
Further Discussion
If a joint venture of some kind may make it easier for you to move into the home of your dreams, by all means consider it. Talk through all the details first, however, with both a conveyancer and a tax agent as appropriate.
