Property sharing agreements such as ‘tenancy in common’ are becoming more popular as individuals seek certainty after property purchases. This form of ownership enables an individual to have control over a share of the property of which they are part owner.
If tenants in common wish to go their separate ways, the party wishing to remain as the property owner does not have to agree to sell, thwarting the wish of the other owner(s). This is where Property Sharing Agreements (“PSA”) are useful. Signed and agreed before the purchase, a PSA provides a strategy if anyone wants to exit the property as owner.
The PSA includes the amount that each party contributed, how much lending was obtained, and if the undivided shares are unequal. It also includes who may give notice when wanting to sell, how a price may be determined, what timeframes are reasonable, and what constitutes a net share of the profit to be paid out in the proportions agreed upon.
Your lawyer can talk you through a PSA and have one drawn up to ensure your future planning is safeguarded.