It is no secret that the economic crisis of 2008 was in response to the burst of the real estate bubble around the country. Prior to 2008, families of all economic backgrounds were buying homes for the first time, many times far above their means. Although many have found that buying property is not as easy at it was before 2008, they are still finding a way. For example, friends and family members are pooling resources to become joint-owners of property.
If you are considering buying property with someone close to you, keep these items in mind:
1.) Ask the Tough Questions – Most lawsuits are avoidable. However, most people do not want to think or talk about the tough issues (especially with friends and family). If you are buying property with someone, you need to be able to talk through issues like what happens if the other partner dies or becomes incapacitated or who will handle repairs and taxes. If the tough issues are spelled out in your agreement, then you can reduce your chances of litigation in the future.
2.) Do not ASSUME – We have all heard the joke about what “assuming” does. Buying real estate with a friend is no different. Don’t assume that your friend has understood your needs and don’t assume your friend is drafting an agreement that you will consider fair. Not only is it nearly impossible for your friend to make decisions without considering her needs, but she may not truly understand what your needs are.
3.) Do your homework – Research the applicable real estate law, zoning regulations, and estate planning laws to ensure that your partnership is viable. All of the laws above (and more) will govern the disposition of your property and your relationship with your partner.
4.) Get a Neutral Third-Party – Having a neutral third-party perform various functions is essential. Tasks like inspections, appraisals, contract drafting, etc. are best performed by someone, who does not have an interest in the property. In addition, it shows a judge that each party was represented and neither party was taken advantage of; should a dispute make it to litigation.
5.) Get everything in writing – Verify everything with a writing! Not only do contracts for the sale of land require a writing to be enforceable, but a writing also provides confirmation that each party understands the terms. By seriously reviewing the contract, you can address any concerns before the sale is final and you are stuck with terms you do not want.
The tips above apply to any sale of property, regardless of the relationship between the parties.
Do you plan to purchase real estate with a family member or friend?
If you are planning on purchasing property, contact a real estate attorney from JacksonWhite at 480-464-1111