When it comes to buying a house, it`s a big and exciting decision. However, when you`re considering purchasing a home with a friend, it`s essential to approach the transaction with caution and ensure that everything is legally binding. The right contract can protect you and your friend`s interests, while ensuring that you both are equally invested in the property.
Here are some things to consider when creating a contract to buy a house with a friend:
Establishing Your Legal Relationship: Before jumping into the home-buying process, it`s important to establish your legal relationship with your friend. Determine whether you`re intending to buy the house as joint tenants or tenants-in-common. Joint tenancy means you both own equal shares of the property, and if one dies, the other becomes the sole owner. Tenants-in-common means you own specific percentages of the property, which you can sell or assign to others.
Establishing Payment Contributions: With a clear understanding of your legal relationship, the next step is to establish how you`ll contribute financially to the property. You should discuss how much each of you is willing to contribute and how you plan on making payments towards the mortgage, taxes, and other expenses.
Dividing the Property: Determine how you`ll divide the property if either of you wishes to sell or transfer the ownership to others. Setting up a process for selling or buying out the other person can prevent conflicts down the road. You can also use a buyout provision, which outlines how much one person would need to pay the other in case of a buyout.
Establishing Maintenance Responsibilities: All homeowners are responsible for maintaining their properties. You should discuss how you`ll divide maintenance tasks and expenses, such as lawn care, repairs, and utility bills.
Determining Dispute Resolution: Even the best of friends can run into disagreements. Therefore, it`s essential to establish dispute resolution processes upfront. Consider setting up a mediation or arbitration process in case conflicts arise.
Conclusion: A well-written contract can prevent misunderstandings and conflicts between you and your friend when buying a house. Working with an experienced attorney can help ensure that all the legal requirements are met and can help you draft a contract that protects both of your interests. Taking the necessary steps to establish a sound agreement will make your homeownership experience enjoyable and stress-free.