Think of buying real estate, and you’re likely to think of price first. What can you afford to buy? Some people believe they’re so far out of reach of the market that they’re purchasing real estate with a group of people.
How does this work?
There are two ways to purchase a property in multiple names – one is called a joint tenant ownership and the other is called a tenancy in common.
What’s the difference?
Joint tenants own the property equally and all must be legally involved in any transaction to do with the property, such as if one party decides to sell. In the event that one of the joint tenants passes away, the other joint tenant/s take equal shares of that person’s share.
A tenancy in common allows multiple shareholders to hold larger or smaller shares of a co-owned property, and transact on their share independently of other parties so they don’t require the other party’s signature/s should they want to sell. It also means that if a part owner dies, their share doesn’t get split between the other parties that have interest in the property.
It’s something to consider when you’re thinking of purchasing a property as a group. Weigh up the best options for your circumstances and ensure everyone understands their obligations in the deal. It can get messy if parties aren’t amicable throughout the partnership.