Ronnie Koenig discusses a common new practice for individuals looking to buy a home with a limiting budget, that is, choosing to share a place with other buyers, usually family or close friends. Koenig gives several anecdotes of groups who have set out on this type of home-buying/fixing journey and their experiences. Of course, it’s not always easy. Koenig says,
Buying a place with other people has predictable pitfalls.
“When people purchase property together, they become jointly liable for all the expenses,” said Jaime Lathrop, a lawyer in Park Slope, Brooklyn, who handles real estate litigation and transactions. “If one person wants to sell, then they can force a sale, with very limited exceptions. If people go in on loans, it’s a great way to wreck your credit. Each person should retain their own attorney to advise them on their rights and responsibilities.”
Stuart Berg, a partner in the real estate department of the New York firm Kurzman Eisenberg Corbin & Lever, said it’s essential to map certain things out in advance of a group purchase.
“Decide how the property will be owned. Will it be owned by an entity such as a limited liability company or individually?” he said. Owning under an L.L.C. can protect buyers from personal risk and may offer certain tax benefits.
“It’s essential to determine up front the financial arrangements of each party and whether each party will be entitled to the full use and enjoyment of the property,” Mr. Berg added. It’s also important to put in writing what would happen “if one party cannot meet his or her agreed-upon financial obligations.”
Continue reading the article here: When Friends Buy a Home Together – The New York Times
Posted by Allison Trupp, Associate Editor, Wealth Strategies Journal