Not only is purchasing a home a bold move for anyone but for unmarried couples, it can challenge other layers of complication as well. One way it could be done is through a co-tenant agreement which is a legal document that defines the terms associated with owning home together, and their individual rights and responsibilities to the property. This document ensures your first purchase together or new property refinancing is well-coordinated between both parties, and also promotes clear ownership to avoid any potential disagreements later on.
Co-Tenant Agreement Explained
This is an agreement between co-tenants that sets forth the rights and obligations of each co-owner. From financial contributions, to property upkeep and the process for selling or transferring ownership if one partner decides they would like to part ways. This is especially powerful for partners in Florida who are not married as it can prevent disagreements and set forth expectations of ownership at the outset.
What to Include in a Co-Tenant Agreement?
Financial Contributions: This section should outline how much each person will contribute toward the down payment, mortgage, and other costs. You can choose to split these evenly or in a way that reflects each person’s income.
Taxes and Insurance: The rental agreement should clearly define who is responsible for paying the property taxes and insurance. Establishing how these costs will be split and what happens when someone is unable to pay their share.
Property Maintenance: It’s essential to decide who will take care of routine maintenance and how the costs for repairs will be split. You might also want to include a system for budgeting for future repairs.
Living Arrangements: Determine whether both partners must live in the residence full time, and restrict renting. Detail what renovations the tenant is allowed to make, if any.
Settle Disputes: Establish a way to settle disagreements outside of taking someone to court with mediation or arbitration. Consider adding a clause that requires legal advice before any major actions are taken.
Selling or Transferring Ownership: In the event that a partner decides to sell (or buy out) their share, the agreement should walk through what that looks like. These could involve policy guidelines for a buyout of the other partner's ownership, or rules about selling the property in its entirety and the distribution of those funds.
Separation or Death: It’s wise to plan for what will happen if the relationship ends or one partner passes away. This could involve selling the home, buying out one partner, or transferring ownership to the surviving partner.
Importance of Co-Tenant Agreement
Ambiguity about who is entitled to what and when payments must be made, can cause long, drawn out and expensive court battles between co-tenants. For couples who are not married, it establishes good practices to protect both sides, and ensures that everything is dealt with in a fair way. By putting an agreement in writing that recognizes what each partner wants and their future goals, they can avoid any misunderstanding regarding their home ownership experience.
Drawing up a co-tenant agreement before you purchase your home together is an easy way to ensure everyone gets what they want and the investment is protected, giving each tenant peace of mind. If you are buying real estate in Florida, it is always a good idea to contact a Florida Real Estate Attorney who will not only prepare your agreement for purchase and sale but, make sure the contract covers all of the important points.
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