Homebuyers who are thinking about purchasing a home with friends, or are already in the process of looking for the right home, need to give some careful thought about the pros and cons of this partnership.
The Right Match
Choosing a suitable partner with compatible style and finances is the most important first step in co-buying a home. Could you share common living spaces with them? They may be great at throwing parties, but that doesn’t make them the right match for a major real estate purchase. Also, establish early on if the home will be everyone’s permanent place of residence. Any concerns about renters, noise, and cleanliness should be discussed immediately.
Be Honest
Be upfront about all concerns and issues from the outset. Homebuyers shouldn't bite their tongues over how much they want to spend, what type of space they are looking for, or how many rooms they desire. This partnership is something that ideally will last for many years to come. Honesty up front is always the best policy.
Face Your Finances
Understand that both parties' finances will be made public to the other. If one party is embarrassed about their credit history, or uncomfortable making this information public to a close friend, they should reconsider this partnership. Also, be upfront about finances. Concealing debts, school loans, or other important financial information is unfair. Entering into this partnership only to have it end in foreclosure isn’t something either party wants.
Finding the Right Space
The space a potential homeowner is looking for has to be suitable to all parties involved. A home with an equal number of rooms is more desirable if the partners are going to split the costs of the home 50/50. Harboring ill feelings towards one party occupying a bigger space will only lead to disaster. Space issues have to be discussed and agreed upon at the very beginning.
Find A Lawyer
Find a lawyer who has dealt with shared house buying before. Have the lawyer draw up a contract between all parties before any house documents are signed. A verbal agreement about sharing of common areas or selling rights is not enough. Everything should be in writing as early as possible. This way, everyone is clear about their rights and responsibilities as co-owners.
Be sure to discuss any possible unpleasant outcomes, (death, divorce, bankruptcy) and account for them in a contract. These are uncomfortable subjects, but they are necessary topics of discussion in any business agreement.
Be A Team Player
Everyone should play a role in making all the pieces come together. Each partner can be the primary contact person with the lawyer, engineer, homeowner's insurance agency, and architect. Piling all of the work on one person isn’t fair, and it doesn’t make the other partners active participants in the home-buying process. Too much money is at stake for anyone to idly stand around while others take the steps to close the deal.
After the home is purchased, this team player attitude should carry over into the upkeep of the home. Set up a schedule for monthly house meetings. Write out a maintenance schedule for cleaning the hallways, taking out the trash, and tidying up the front yard. These may seem like menial tasks, but they are important in homeowner partnerships. As co-owners, maintaining a beautiful, safe, and clean living environment, should be everyone's top priority.
Business As Usual
Co-owners should realize that their home is a business arrangement. Friends who come into this situation without a real understanding of the process will be in for a rude awakening. Bills need to be paid on time, and necessary repairs need to be made in order to ensure the safety of all occupants. Homeowner partnerships need to be viewed as a business as well as a living arrangement in order to make it a success.
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