A co-ownership agreement (also known as a tenancy in common or TIC agreement) is where you get down to the brass tacks of co-ownership. It’s the contract you and your co-buyers sign that addresses all of the meaningful aspects of owning, maintaining, and selling your home. Think of it as a roadmap for navigating your shared investment. No one wants to get lost! Clear, thorough directions will help you avoid time-consuming and expensive conflicts.
The term “hold title” refers to the way your ownership is registered legally. There are several ways to hold title, and each has its own regulations.
When buying with a spouse, joint tenancy is the most common way to hold title. But for those buying with friends, family, or investment partners, the added flexibility and protections of tenancy in common make it the better ownership option.
Let’s start by looking at some key features of tenancy in common:
- Ownership shares don’t need to be equal. If someone has more to invest, or less, that’s perfectly fine. With tenancy in common, you can split ownership in a way that fits your situation. This differs from joint tenancy, in which every owner has an equal share.
- You can sell your share of the property. The only time this isn’t the case is if you’ve signed a legal contract saying otherwise. In any case, your co-ownership agreement should address the sale of the home in a clear, direct way.
- You can set up a trust saying who will inherit your ownership share if you die. Want to learn more about trusts? This Investopedia article is a great place to start.
- You’ve got control over your ownership terms. How will maintenance be handled? Will you allow vacation rentals? What about pets? All of this can—and should—be outlined in your co-ownership agreement.
Your Co-Ownership Agreement
A good co-ownership agreement lays out the rules of the road for all three phases of co-buying: purchase, management, and sale. Writing one can feel overwhelming, which is why we’ve made a free online tool to take you through it step by step. After you’ve finished, you’ll have a document that a real estate attorney can use to make a legal agreement specifically for your state or province. You’ll also have taken a big step on your co-buying journey. Let’s get started!