The advantages that come with co-owning real estate property are undeniable. But many people make the mistake of entering into co-ownership real estate agreements without fully understanding what it is they are getting into.
There are many legal issues to take into consideration when you are going to be co-owning real estate property with friends, family, or other investors. Make sure you have a dedicated legal advocate working for you. Contact an experienced Maryland real estate lawyer at Evans Law to schedule your initial consultation. Call us at (410) 626-6009.
Types of Co-Owned Property
There are specific legal issues that you should take into account when you are considering co-owning real estate property. First, there are several different types of co-owned property. These can include joint tenancy and tenancy in common.
Joint tenancy agreements are a form of joint ownership. Here, each of the owners have their own interest in the entire property. In layman’s terms, this means that the entire property is owned by both co-owners. The property is not split up by rooms, floors, or in any other way. The common ownership is of the entire property as a whole.
Tenancy in common is also a type of joint ownership, but it is slightly different. Instead of sharing joint ownership of the entire property, owners do not have to have equal shares. For example, if one party wanted to own sixty percent of the property, and another owned forty percent of the property, this would be allowed in a tenancy in common call owned property agreement.
But no matter what type of joint ownership a real estate agreement you enter into, there are certain legal issues that you will need to consider before you sign on the dotted line.
Both Owners Have the Right to Use the Property Whenever They Want
Both owners have the right to use the property whenever they want when co-owning real estate property. This means that if multiple property owners want to use the property at the same time, they may need to come to an agreement about which party’s wants will take priority during specific times.
For co-owner property agreements, both owners have the right to use the property at any time, so you will need to be prepared to work out the details with your co-owner should the situation arise.
Owners That Pay a Disproportionate Share of Expenses May Not Be Reimbursed
When people own real estate property together, they are responsible for all of the expenses as well. If one co-owner begins to struggle financially, and the other covers their costs for the period of time, the owner that pays the disproportionate share may not always be reimbursed.
There have been numerous situations in which the struggling co-owner makes claims that the financial help was a gift, as opposed to a loan. Make sure that you work out these details with your co-owner before you enter into your real estate agreement. This could go a long way in protecting you and all co-owners in the future.
Owners Have the Right to Make Changes to the Property Without Needing Permission if Changes Will Increase the Value of the Property
It is always important to note that all co-owners have the right to make changes to the property at any time without needing permission of the other co-owners. But this is only true if any changes made to the property were supposed to increase the value of the property.
Let’s say one co-owner wanted to improve the property by adding an in-ground pool without asking permission from the other co-owners. This co-owner would have the right to do so, even if the other co-owners object to it after the fact. Be prepared for these types of discrepancies, and to discuss these potential issues with your co-owners.
Co-Owners Can Rent the Property to Third Parties Without Needing Permission
Another point of contention that also arises in co-owned real estate agreements is renting to third parties. Co-owners have the right to rent the property to third parties without having to get permission from other co-owners. If one co-owner feels the need to increase their income by renting out the property during their time, other co-owners do not have the right to contest this, since permission is not required.
Get Help from a Skilled Real Estate Attorney in Maryland
Co-owning property with family or friends may seem like a great opportunity, but it does not come without its risks. If you are interested in co-owning property with a friend, family member or business partner, it is important to have an experienced Maryland real estate lawyer by your side to advocate for your rights.
Schedule your no-risk case review with Evans Law when you fill out our online contact form. Or give our office a call at (410) 626-6009 to get started today.