Co-owning real estate?

[steve-in-kville]

Has anyone ever bought property and had it titled with yourself and someone else, other than a spouse? Like with an adult child or parent? Was there a mortgage? Would you recommend doing something like this again?

[mike]

Has anyone ever bought property and had it titled with yourself and someone else, other than a spouse? Like with an adult child or parent? Was there a mortgage? Would you recommend doing something like this again?

I own real estate with my father. It works fine for us. I would do it again, but like any other business partnership it is important to have a good relationship among partners, and also a pre-determined plan to dissolve the partnership if either party wants to get out of the arrangement.

[steve-in-kville]

I own real estate with my father. It works fine for us. I would do it again, but like any other business partnership it is important to have a good relationship among partners, and also a pre-determined plan to dissolve the partnership if either party wants to get out of the arrangement.

Good to know. My oldest son works in construction and he is tossing around the idea of buying fixer-upper once the market settles down a bit. He has zero credit and I am considering going half's with him on it. Most likely he will live in it once fixed up (marriage could be in the future here).

[ohio jones]

I own real estate with my father. It works fine for us. I would do it again, but like any other business partnership it is important to have a good relationship among partners, and also a pre-determined plan to dissolve the partnership if either party wants to get out of the arrangement.

Good to know. My oldest son works in construction and he is tossing around the idea of buying fixer-upper once the market settles down a bit. He has zero credit and I am considering going half's with him on it. Most likely he will live in it once fixed up (marriage could be in the future here).

You might also consider what happens if either party has to get out of the arrangement whether they want to or not (i.e. death). If you want the survivor to become the sole owner if that happens, rather than the deceased's share going into their estate and potentially being subdivided further, the deed can be written that way.

[Ken]

Just have all the contingencies planned for. This happened in my family.

My grandparents had a large tract of woodland with old cabins on the mountain above Belleville PA. When they died they left the property jointly to their 5 children, including my mother. The idea I suppose was to keep it in the family. Except that only one of the siblings even lived in PA at that point, the one who had taken over the family farm below. Who basically maintained the property and was the only one who used it with his kids for hunting and recreation.

Fast forward about 15 years. One sibling married into an abusive relationship and then died of a heart condition leaving behind an abusive husband that the family was estranged from and three children. They were living first in Chicago and then Florida. A second sibling and his wife died leaving a collection of children and grandchildren as heirs who were also in another state. The three surviving three siblings were alive and well, but only one lived in PA.

At this point the family thought the best solution would be to sell all the woodland and cabins to the one remaining PA sibling and his family as they were the only ones with any use for it and the ones who had been using and maintaining the property for two decades anyway. Except that the abusive surviving spouse of one of the dead siblings now living in Florida was now part owner of the property by inheritance, even though he apparently didn't even know it. And no one in the family wanted to approach him for fear he would be unreasonable. So the property sat unchanged for another decade.

Fast forward another decade and the abusive widowed spouse also finally died leaving 3 children (my first cousins). At that point there were maybe 10 people with various interests in the property. The 3 surviving siblings. The 3 children of one dead sibling. And the children and grandchildren of the other dead sibling. The family came up with a very reasonable but fair price for the land based on the going price per acre of woodland in the area and recognizing that only one sibling had been maintaining the property for decades. And they contacted and sent out letters to all the different heirs explaining the situation and that the family wanted to buy out their shares in the property. None of the grandchildren heirs even knew the property existed and luckily all of them agreed to take the windfall money and not fight the sale.

The whole mess took over 3 decades to resolve and lots of headache and all because my grandfather left a piece of property to his children jointly rather than just leave it to the one sibling who was actually going to use it and doing something else for the others.

[Neto]

Some many years ago, when we had some funds we wanted to invest, my father-in-law & I (we were back in the States on furlough at the time) went to various land auctions. Then another came up while we were visiting my folks in Oklahoma. Well, my wife's two brothers wanted in on it, so instead of owning the entire property, we are only 1/2 owners, with my wife's younger brother owning 1/4 share, and her older brother's widow owning the other 1/4. Sometimes we would have like to sell out, but the other family members don't want to pay the market value, when it was purchased for investment, not for any personal use. (There is nothing there but trees, and steep hill sides. Very good for hunting deer, but I'm not into hunting.) So currently it is owned by three different family trusts. Do you all ever sell land or stocks you bought as investments? (Seems that usually once it's in there, you never get it back out. But as they say, they're not making any more - land, that is.)

[mike]

The whole mess took over 3 decades to resolve and lots of headache and all because my grandfather left a piece of property to his children jointly rather than just leave it to the one sibling who was actually going to use it and doing something else for the others.

Do you feel it is fair to leave one of your children a valuable asset just because that child was the only one who was actually going to use it? What if the asset was a profitable business or a valuable heirloom? I realize you can do whatever you want with your estate, but just wondering what you think is fair.

[RZehr]

I co-own some land with other people. Some with my dad, and others with my in-laws. I've divested of jointly shared real estate in the past too. Its always worked out fine in my experience. But I am very careful who I'd do it with. And I wouldn't do it out of greed/aggressive leveraging. In other words, if I can't afford to take a loss on it in order to get out of the partnership, then why do it?
Another thing to weigh is the wealth of your partner. Am I the poor one? Am I benefitting from the wealth of my partner? If hard times come, can I hold up my share of the responsibilities?
Or am I the wealthier one, and my partner is the one who can less afford the property? If hard times come, can I help assist my partner, or will his inability put the project at risk?
Or are we relatively equal in terms of finances? These dynamics may effect your relationship and a necessary course of action should hard times come upon the project.
And I'd recommend getting a written agreement in place for divesting and conflict management. You can probably change the details of these agreements later, but having anything in place is better than nothing. No partnership lasts forever, so you might as well plan for the split at the beginning.
I wouldn't leave assets to multiple individual heirs either. All your doing is, instead of doing the difficult work yourself while you are alive, you are burdening someone else who has to sort it out in the future. Fairness, equality, and wisdom are not always the same thing.

[Ken]

The whole mess took over 3 decades to resolve and lots of headache and all because my grandfather left a piece of property to his children jointly rather than just leave it to the one sibling who was actually going to use it and doing something else for the others.

Do you feel it is fair to leave one of your children a valuable asset just because that child was the only one who was actually going to use it? What if the asset was a profitable business or a valuable heirloom? I realize you can do whatever you want with your estate, but just wondering what you think is fair.

My grandparents also had other assets. They could easily have divided up their estate fairly and equitably without opening up that rats nest of co-ownership of property by giving the land to one sibling (who wanted it) and extra $$ to the other four siblings to balance things out. Or they could have let the PA sibling buy out the others at the time of inheritance. But everyone just went along with grandpa’s wishes that the property stay shared in the whole family until it was a giant mess to fix. Time has a way of making things very complex when it comes to property ownership. And you may wind up through subsequent inheritances to be co-owners of property with in-laws, ex-spouses, and other distant heirs who you want nothing to do with. You are at the mercy of the decisions of your co-heirs. What if one decides to leave all their assets to charity or a church and now there is a charity or church that now has part-ownership of your property.

[Neto]

I think that the only way to be sure that no one will feel like they got the short end of the stick is to sell the property on the open market, with the agreement of all owners, then split up the proceeds. But sometimes agreement to sell is slow in coming, and sometimes the one holding out changes. (Ever watched the old film "Twelve Angry Men"?)