Owner of 1/2 of a house

Investor · Tucson, AZ · Member since 2009 · 171 posts · 27 votes

As owner of 50% of a house, what items should be in a contract with the other half owner to protect us both as singly and as partners planning to hire a management company and rent the house? Both owners are out of state. One thing to consider is a now empty in-ground pool. This house was used as a rental with pool several years ago.

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Andy D.

Rental Property Investor · Worcester, MA · Member since 2018 · 5 posts · 1 vote

Is the house under your individual names or an LLC in which you're equal partners, and do you mean protection from outside parties or each other (or, ideally, both)?

Even if you haven't or don't plan to form an LLC, it's not a bad idea to notarize your contract/operating agreement to spell out "if this happens, we do this" for every conceivable potentiality regarding the property and each other - particularly with regards to if one of you wants to sell and the other doesn't, or if one of you ceases, even temporarily, being able to meet your obligations to the property for any reason at all.

Just a few of the things off the top of my head from one of my contracts:

Noting which parties contributed how much towards capital.

Establishing right of first refusal in the event of one party wishing to sell.

Where bank accounts, credit cards etc are held, and who can do what with them.

Cash flow protocol (all rental income goes into X account, $Y each money gets autotransferred to savings, $Z each month is put towards maintenance, etc).

Disbursements of surplus money in X account can only be made if certain conditions are met.

Explicit recognition that all bills may only have one party's name but are a shared responsibility between or across partners.

What items require unanimous consent to proceed from partners? Which items require 2/3? What demonstrates consent (a "yes" via email).

There are certainly more, but those are the ones that came to mind right away.

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Andy D.
Rental Property Investor · Worcester, MA · Member since 2018 · 5 posts · 1 vote
8y
Is the house under your individual names or an LLC in which you're equal partners, and do you mean protection from outside parties or each other (or, ideally, both)?

Even if you haven't or don't plan to form an LLC, it's not a bad idea to notarize your contract/operating agreement to spell out "if this happens, we do this" for every conceivable potentiality regarding the property and each other - particularly with regards to if one of you wants to sell and the other doesn't, or if one of you ceases, even temporarily, being able to meet your obligations to the property for any reason at all.

Just a few of the things off the top of my head from one of my contracts:

Noting which parties contributed how much towards capital.
Establishing right of first refusal in the event of one party wishing to sell.
Where bank accounts, credit cards etc are held, and who can do what with them.
Cash flow protocol (all rental income goes into X account, $Y each money gets autotransferred to savings, $Z each month is put towards maintenance, etc).
Disbursements of surplus money in X account can only be made if certain conditions are met.
Explicit recognition that all bills may only have one party's name but are a shared responsibility between or across partners.
What items require unanimous consent to proceed from partners? Which items require 2/3? What demonstrates consent (a "yes" via email).
There are certainly more, but those are the ones that came to mind right away.
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Ray Harrell
Investor · Chicago, IL · Member since 2016 · 1k+ posts · 930 votes
8y
Are you owner of half a house, or half owner of a whole house?
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Mary R.
OP
Investor · Tucson, AZ · Member since 2009 · 171 posts · 27 votes
8y
As a whole person, I am the whole owner of 50% of a whole house. Another whole person holds title to the other 50 percent of the house. The house is one state, each of us reside in different states (3 states total) if it makes a difference.
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Mary R.
OP
Investor · Tucson, AZ · Member since 2009 · 171 posts · 27 votes
8y
As a whole person, I am the whole owner of 50% of a whole house. Another whole person holds title to the other 50 percent of the house. The house is in one state, each of us reside in different states (3 states total) if it makes a difference.
0 Reply
Mary R.
OP
Investor · Tucson, AZ · Member since 2009 · 171 posts · 27 votes
8y
As a whole person, I am the whole owner of 50% of a whole house. Another whole person holds title to the other 50 percent of the house. The house is in one state, each of us resides in different states (3 states total) if it makes a difference.
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Mary R.
OP
Investor · Tucson, AZ · Member since 2009 · 171 posts · 27 votes
8y
Andy, thanks. that's several things we had not considered.
As a whole person, I am the whole owner of 50% of a whole house. Another whole person holds title to the other 50 percent of the house. The house is in one state, each of us resides in different states (3 states total) if it makes a difference.
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Jay HinrichsBusiness Member
Real Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
8y
Originally posted by @Mary R.:

As a whole person, I am the whole owner of 50% of a whole house. Another whole person holds title to the other 50 percent of the house. The house is one state, each of us reside in different states (3 states total) if it makes a difference.
are you tenants in common with a 50/50 ownership on the Deed that you took title with ???
just show the deed to your insurance man/women and tell them you need insurance they will do the rest .. no sweat.
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Mary R.
OP
Investor · Tucson, AZ · Member since 2009 · 171 posts · 27 votes
8y
We are beneficiaries of a trust. Title has not yet been taken.
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