Selling a house you bought with someone else
Co-Buying a Property: Planning for the Future Sale
Entering into a co-buying agreement with someone requires careful consideration of how to eventually exit the arrangement. While you might be the best of friends now, it's crucial to establish a solid contract to maintain your relationship when one of you decides to move on. Here are some options for selling the property, all of which should be detailed in the co-buying agreement from the start.
First Right of Refusal
Will you give the other party or parties a "first right of refusal"? This means they get the first opportunity to buy your share before you list it on the open market. If you choose this route, specify the potential terms in advance. Can they purchase your share with seller financing, or must they pay in full immediately? Clarifying these details beforehand will prevent misunderstandings later.
Selling to a Third Party
Decide in advance if the co-owned share of the property can be sold to a third party. If so, determine the parameters of such a sale. Consider factors like usage rights, the right to approve the sale, the requirement for owner-occupancy (to prevent renting), and how to manage utilities, disputes, and maintenance. Addressing these issues upfront will ensure a smoother process if a sale to a third party becomes necessary.
Title and Financing Considerations
These terms will influence how you and your co-buyers decide to take title of the property. Additionally, it's important to consult with a mortgage broker who is familiar with alternative buying arrangements. Not all mortgage brokers have this expertise, so find one with access to a variety of funding sources, including non-traditional ones like private funding.
Legal Advice
Consider hiring a real estate attorney to draft your co-buying contract. The agreement between co-buyers is distinct from the one made with the seller, so having legal guidance will ensure all parties are protected.
If you need a referral to an attorney or a knowledgeable mortgage broker, feel free to reach out.
Anyway, thanks for your time. If you’d like to connect or share your thoughts, I can be reached via email at craig@capitol-summit.com.
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