Tips for Long Island Co-Owners
There are a lot of reasons why people become the co-owners of a property, including inheritance. And when everyone wants the same thing, co-ownership runs as smoothly as any other kind of ownership.
But when someone wants out, things can get messy. Which means no matter why you’ve become a co-owner, it pays to be prepared for future problems.
Make Sure You Understand What Kind of Owner You Are
Assuming you’re not a married couple (which is an entirely different form of shared ownership), you are either tenants-in-common with the other owners or joint tenants. And the one you are determines what you theoretically have the power to do.
Joint tenants may sell their share of the property any time they want, to anyone they want. Tenants-in-common must seek an agreement, or judicial intervention, if they can’t agree on what to do when one party wants out.
Understand Your Options During a Dispute
If a co-owner wants to sell they can:
- Try to convince the other co-owners to sell the property and split the proceeds or loss.
- Sell his or her share of the property to someone else.
- Seek a partition in court, which could result either in the property being physically divided or, if that is not possible, forced onto the market by court order.
Selling shares of a property isn’t always easy unless it’s a vacation property or a rental property that nobody lives in. Who wants to buy 25% of a property that they’ll have to share with people they don’t know well? Unless the property can be physically divided, most of these disputes end in a sale.
Keep Proof of Contribution
If you’ve been paying for upkeep, repairs, or property taxes, be sure you keep the receipts and cancelled checks. If you are legally forced to sell the property you’ll be able to present these to the courts. They will be used to adjust your ownership share of the property upward so that you get your fair share when the property is sold.
You should also try to build up equity as quickly as possible. Mortgage companies don’t care what contributions you made, and remaining in debt after a sale can get messy for every co-owner.
If You Live There, Have a Back-up Plan
Being in possession of the property doesn’t bar your co-owners from trying to sell their shares. If you can’t buy out their share then you may have to move sooner than you’d hoped to.
Make sure you keep a moving fund handy, even if you think everything will be fine. People’s needs, personalities, and dynamics do change, and you never know what tomorrow may bring.