Alone No More: The Rules of Co-Ownership

Many people are not aware that buying a property with someone else is a whole different matter. Co-ownership has its own legal and financial processes compared when buying a house on your own. Buying a property with someone else is not simple it can create an emotional and financial turmoil between you and your partner.

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Buying a property with a lover, a business partner, a relative, or a friend, has their own rules to consider. Here are some of them:

For the married couple

To protect married couples, we have the “The Family Code of the Philippines” which stipulates that if the married couple did not sign a prenuptial agreement, the property is automatically co-owned and becomes a part of a single estate. Read this article for an in depth look at buying properties as a married couple.

For non-spouse

When buying a property, you will receive a papers called “title” and “deed.” These papers detail how you and your partner will be sharing the property. You have two options: the Tenants In Common (TIC) and Joint Tenants With Right of Survivorship (JTWRS).

What’s the difference between the two? TIC allows you and your co-buyer to have unequal interest to the property. When one of you dies, the share of the deceased will go to his or her beneficiary and not to the partner. This works best if one of you invested more money on the property than the other one.

Meanwhile, JTWRS is all about 50-50 sharing. The two of you will have an equal share with the property. When one of you dies, all of his or her shares will go to the remaining property partners.

The two conditions also have similarities. With the TIC and JTWRS both you and the co-buyer have the rights to enjoy the property just the way you guys would like it. This also means that you are both entitled with the rental income and ownership just in case one of you decides to rent the property out.

Drafting a co-ownership agreement

Come up with ground rules that can help the two of you escape conflict. You will never know when emotional and financial problems may arise. Hire a lawyer who can prepare the needed documents and draft an effective agreement. Your agreement must include how the owners will include the title, ownership percentages, purchase cost, down payment division, responsibilities on maintenance, and so on.

Dissolving the interest

But what if one of you wants out? One can dissolve his share on the property by transferring it to someone else. The person who wants to get out of the co-ownership will have to sell his or her share to another party. With a TIC agreement, the dissolution of property may cause for the division of the lot. The proceeds of the property may be divided on how much your share will be.

Meanwhile, with a JTWRS agreement, the remaining owner will still share what the original co-buyer has left.

Choosing between TIC and JTWRS is probably the hardest part of co-ownership. Choose an agreement that will befit both parties equally. For business partners, TIC is the way to go since your shares on the property are both protected. For relatives, JTWRS will make sure that each family member will have the chance to own the shares just in case an accident happens.

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