Buying a Property With Friends/Relations
Buying a house/unit with a friend or relation is great way to get a foot hold in the property market. It is however strongly recommended that you prepare a written agreement. Even the best of friends and closest of relatives can fall out or have a dispute down the track.
The agreement can record the following:-
- Each person’s contribution towards the purchase of the property (i.e. how much was paid by each person towards the purchase price, stamp duty, legal fees etc)
- How the property is owned.
- The proportion of each person’s interest in the property and their liability for the upkeep of the property and any maintenance/repairs required to be taken in respect to the property.
- Whether each person can or has borrowed against the property.
- How the parties can end the agreement (in the event that a disagreement arises).
- How the parties can transfer their share/interest in the property.
- Whether the parties can force the sale of the property.
- How the proceeds of the property are to be applied to discharge any of the parties’ liabilities and in what order as to how the net proceeds are to then be divided between the parties.
- A mechanism for one party to buy the other party out or alternatively for the sale of the property which includes the process of appointing an Agent to sell the property including setting the reserve price.
It is our experience that often if there is a falling out between couples, friends or relations. Even the most basic/simple things usually cannot be agreed upon (for example, which real estate agent to appoint to sell the property). If you have a properly drafted Agreement, it will no doubt avoid any further disputes between the parties and assist with an amicable sale or transfer of the property, which will obviously save time, effort and costs.
For further information or assistance please contact Rockliffs on 02 9299 4912 or email us at email@example.com