First Home Facts

Take These Precautions If You Want To Buy A House With Another Person

If you can't afford a house on your own, consider buying and owning it with another person. This is known as property co-ownership. Real estate opportunities can open up if you do this. Do these four things first if you have decided to go down the co-ownership route:

Clarify Use of the House

This is one of the first things you should agree on because it can bring heated disagreements as soon as the purchase is complete. You need to decide whether you will be roommates, whether one of you can rent out their rooms or whether you have to rent the house and share the proceeds. You should also discuss some of the things neither of you is allowed to do in or with the house. For example, if you don't want a swinger's party held in the house, this is the time to share your views.

Decide How to Handle the Responsibilities

Owning a home comes with a lot of responsibilities; some of them you will only realize once the home is actually yours. You will need to clean the house, mow the lawn, maintain its different parts (such as the roof and plumbing), and pay property taxes, among other things. Even if you have decided to hire other people for all these duties, one of you (or a property manager) needs to supervise the hired help. You don't want your yard to overgrow just because both of you are on vacation and each thinks the other should have taken care of the issue. You also need to decide where you will be getting the maintenance money.

What Happens If Either Of You Die

Lastly, you also need to settle the survivorship issue; what happens if one of you dies? People don't like to talk about death, but it is a fact of life. You don't want the remaining co-owner to be left in a legal quagmire because they can't take full ownership of the property. There are different ways of handling this issue; for example, you can decide on a tenant-in-common (TIC) agreement in which either of you can pass on their share of the property (via a will) to a beneficiary.

Have A Legally Binding Agreement

Making the above decisions is all well and good, but you also need to ensure that both of you will abide by the agreement. Even the best agreement in the world is only as good as its enforcer; what happens if the person in charge of paying the utility bills fails to do so? The best way to avoid such complications is to draw up and sign a legally-binding agreement.