Agreement between 50/50 owners of a rental unit

Investor · Member since 2023 · 39 posts · 18 votes

Hi folks,

I am closing on a property with my cousin and both of our spouses. Each family will own the property 50/50. In the process of coming up with a legal agreement between us, we cannot figure out how to address when we have differences on how to solve disagreements on repairs. For example one family wants to repair the roof and the other wants to replace it. Any suggestions appreciated.

Thank you!

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Chris SeveneyBusiness Member

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Investor · VA · Member since 2015 · 21k+ posts · 19k+ votes

Quote from @Nina V.:

Hi folks,

Thank you!

That right there is the issue with 50/50 agreements. someone needs to be the manager and take the lead on these things and split the vote. I applaud you for thinking about these things now and the what is can happen if things change or do not go for the better. It is much easier to have the discussions when a decision is not required to be made and figure out how to resolve them now compared to when the time comes.

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Chris SeveneyBusiness Member
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Investor · VA · Member since 2015 · 21k+ posts · 19k+ votes
2y
Quote from @Nina V.:

Hi folks,
I am closing on a property with my cousin and both of our spouses. Each family will own the property 50/50. In the process of coming up with a legal agreement between us, we cannot figure out how to address when we have differences on how to solve disagreements on repairs. For example one family wants to repair the roof and the other wants to replace it. Any suggestions appreciated.
Thank you!

That right there is the issue with 50/50 agreements. someone needs to be the manager and take the lead on these things and split the vote. I applaud you for thinking about these things now and the what is can happen if things change or do not go for the better. It is much easier to have the discussions when a decision is not required to be made and figure out how to resolve them now compared to when the time comes.
7e investments53 Reviews
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Matthew Paul
Severna Park, MD · Member since 2013 · 7k+ posts · 7k+ votes
2y
51 - 49 somebody has to be the boss
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Bruce WoodruffPro Member
Contractor/Investor/Consultant · San Diego / Phoenix · Member since 2021 · 12k+ posts · 15k+ votes
2y
Quote from @Matthew Paul:

51 - 49 somebody has to be the boss

Or do an LLC and appoint the most knowledgable (property/repairs) person as Manager. Make it clear in the agreement that the Manager has the sole authority to make decisions about repairs and maintence to the property.
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Nathan GesnerBusiness Member
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Real Estate Broker · Cody, WY · Member since 2010 · 28k+ posts · 41k+ votes
2y
Quote from @Nina V.:

Partnership agreements are important. You must clearly define roles and responsibilities while addressing all the what-if scenarios. What if the roof requires replacement but Partner B can't afford their share? Who is responsible for screening and selecting applicants? How can the other partner replace them if they perform poorly? How are proceeds shared? How will you split the cost of repairs? What if Partner A wants to exit? Can they sell their share to someone else? Do they have to sell it to Partner B? If Partner B passes away, does their share get passed to an heir or to Partner A?
I can't vouch for it, but check out "Real Estate Partnerships" book in the BP library.
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