Drafting a Property Sharing Agreement: Terms to Include

Sharing property with someone else? Here's some language to include in your written agreement outlining each person's rights and responsibilities.

By , Attorney · UC Berkeley School of Law

If you are planning to share a major piece of property with someone outside your family (whether it's a lawn mower, car, or entire house), it's wise to create a sharing agreement to memorialize your understanding of the arrangement. However, such an agreement does not have to be on fancy paper or include lots of "heretofores" and "parties of the first part." Instead, you should write your agreement in plain language, so everyone signing it—and anyone who has to read or agree to it later, like new members, a mediator, or even a judge or arbitrator, if you have a dispute—understands exactly what it means.

Creating a Binding Contract to Share Property

Your group might—or might not—want your agreement to be legally binding. If your group chooses not to create an enforceable agreement, you can simply write down your shared understanding of how your group will work and the rules members will follow, then sign your names.

If, however, your group wants a binding enforceable agreement (in other words, a contract), you will need to agree to exchange something of value (for example, to provide goods or services, pay money, and so on). From a legal perspective, this is called "consideration." This requirement prevents people from enforcing one-sided promises.

If, for example, someone promises to pay you $500 without you promising to do anything in return, and then the other person doesn't follow through, there isn't a contract and you can't sue to get the money. On the other hand, if someone promises to pay you $500 to landscape a yard, and you do the work, you have a binding contract that you can enforce to get paid.

Everyone who's involved in the agreement should date and sign it. (It could even be handwritten, though we don't recommend that.) For simple sharing arrangements, you won't need to have your signatures notarized.

For anything involving real estate, however, notarization will probably be required. And some states have their own requirements about notarization—for example, a few have laws saying that any transfer of a vehicle must have notarized signatures, and others require fingerprints if you're transferring real estate. If you're transferring property of any kind, check your state's laws.

If you're dealing with real estate, have a lawyer draft or at least review your documents. While we're all for handling matters yourself, the paperwork involved in transferring and owning real estate can be complex and subject to lots of state rules. Even if you draft your own documents, make sure you ask a lawyer to review them before you sign, seal, and deliver them. You'll find more information about hiring a lawyer below.

Sample Property Sharing Agreement

Here is a sample sharing agreement for a fairly simple arrangement among people who work in the same building to share a bicycle. You'll see that it covers many of the types of issues you'd want to discuss in any sharing arrangement. You'll also see that the agreement is written in straightforward language that's easy to understand, and runs only a couple of pages.

Sharing Agreement

This agreement is between all members of the Grayson Street Bike Sharing Group ("Group"), who all work together at 1010 Grayson Street. We have decided to share the use of an office bicycle. By signing this agreement, each member agrees as follows:

Purpose: We agree to share a bicycle for the purpose of occasional use by members, in order to save money and reduce our use of energy and natural resources.

Shared Property: The shared item is described as follows: blue Trek bicycle, 13 speeds, "Trek" logo on bar, "One Less Car" sticker on back fender.

Initial Members: Initial members of the Group are Sarabeth Johnson, Martin Carver, Joe Nathanson, and Flora Jiminez. The Group may choose to add new members at a later date, as detailed below.

Number of Members: We agree that the Group should have no more than five members, and that all members must be tenants at 1010 Grayson Street.

Timeline: We will begin sharing on July 15, 2024 and will continue until the group chooses to dissolve.

Ownership: The bicycle is and will remain the separate property of Martin Carver.

Structure: We are a loose association of individuals. We do not intend to enter into a partnership or form an incorporated entity.

Benefits: Each member of the Group may use the bicycle when needed, but for no more than ten trips per week, unless the Group agrees to allow a member more trips.

Decisions: Important decisions of the Group will be made by consensus. Important decisions include those relating to the schedule of use of the bicycle. We will discuss decisions over email using our Yahoo group. If the group cannot reach an agreement, Martin will be the decision maker.

Responsibilities: Each member is responsible for complying with the Group's rules, maintaining the schedule of use, and treating the bicycle well. This Group won't have an administrator as our administrative needs are simple.

Rules: Members agree to use the bicycle only at times they sign up for, ride it with care, return it on time, and always lock it carefully.

Procedures: Members will communicate with each other in the following manner: We'll set up a Yahoo group and a calendar for use of the bicycle. Everyone in the Group can sign up to use the bicycle any time within the limits stated above.

Costs: We don't anticipate any significant costs. Flora agrees to keep the bicycle in good working order with maintenance and tune-ups, at no cost to the rest of the group members. If parts or supplies are needed, Joe and Sarabeth will share the costs equally up to $50 per year, in exchange for Martin's allowing use of the bicycle and Flora performing the maintenance work. If repairs or parts are needed that cost more than $50, we'll discuss what to do.

Loss and Liability: Each of us has health insurance. We all agree to hold one another harmless for any injuries or damages that we incur while riding the bicycle. We all agree to wear a bike helmet at all times when riding the bicycle.

Dispute Resolution: If a conflict or dispute arises that we are unable to solve through discussion, we agree to use SEEDS Community Resolution Center to help us resolve our dispute, and to share the minimal cost equally, regardless of who asks for the mediation.

New Members: Membership is limited to tenants at 1010 Grayson Street, and new tenants are welcome to join the Group.

Procedure for Withdrawing from the Group or Expelling Members: Anyone can leave the Group at any time, and Martin is free to stop allowing use of the bicycle whenever he wishes. If anyone feels that another member isn't following the rules, we'll have an in-person meeting to discuss what to do.

Dissolving the Group: There's no formal procedure for dissolving the Group. We'll end it when there are no longer at least two people who want to participate.

Print Name:__________ Date:_____

Signature:____________________

Address:____________________
____________________

Print Name:__________ Date:_____

Signature:____________________

Address:____________________
____________________

Print Name:__________ Date:_____

Signature:____________________

Address:____________________
____________________

Print Name:__________ Date:_____

Signature:____________________

Address:____________________
____________________

Understanding Contract Boilerplate

Many sharing groups will draft their own agreement in plain English, like the sample above, and be on their way. Sometimes, however, it might make sense to use a standard contract document. For example, you may need to complete official paperwork for your local government, or you might want to use a standard form for your covenants, conditions, and restrictions (CC&Rs), so they can be easily understood by lenders, title companies, and future purchasers of property.

If you use a form contract, you'll quickly run into "boilerplate": standard provisions that appear in many contracts. Here are some examples:

  • Entire Agreement. What you might include: "This document contains the entire agreement of the parties. Any modifications to the agreement must be in writing and attached to this document." Why you might include it: The language makes clear that you don't have any side agreements that aren't included in the written document, and also that you can't make changes without putting them in writing.
  • Successors Bound. What you might include: "This document is binding on the heirs, successors, and assigns of the parties." Why you might include it: You probably would use this provision only if the property you're sharing is valuable and you want to be sure that if someone dies and his or her share passes to a family member, the family member will comply with the agreement.
  • Amendments. What you might include: "This agreement may be amended only by a writing that is signed by all of the parties." Why you might include it: Include this provision if you want to prevent oral changes to the agreement. An agreement could otherwise become muddled over time if you make multiple oral changes and never write them down.
  • Validity. What you might include: "If any portion of this agreement is held by a court to be invalid, it shall be severed and the remaining provisions of the agreement shall remain in full force and effect."
  • Why you might include it: It protects your agreement in case you inadvertently included a provision that your state considers illegal, by making sure the entire agreement isn't doomed by the one bad provision.
  • Choice of Law. What you might include: "This agreement will be interpreted under the laws of the State of __________." Why you might include it: It's unlikely you need this provision, but if the law in your state relating to the subject of your agreement is very different from another state's laws, and there's a chance anyone in your group might move away at some point, including this provision and naming the state you live in could protect you from having to go elsewhere for a court fight.

In later chapters in this book, we provide sample language for various types of sharing arrangements. You can use elements from all of these examples to come up with an arrangement that will work for your group.

Attachments to Your Agreement

Some basic agreements will need attachments, either prepared at the same time as the basic agreement or added later. There are a few different kinds of attachment you might decide to use.

Amendment. An amendment is a later change to the original agreement.

EXAMPLE: Darren and David share childcare; each has one child and pays half the cost of a nanny, who alternates between their homes. Darren will soon adopt a second child. Although they want to continue their arrangement, Darren and David want to make some changes. They write down those changes, including that they will pay the nanny more, that Darren will chip in a larger share of the cost, and that the nanny will spend more time providing care in Darren's home than in David's. At the top of this document, they write:

They both sign the amendment, make copies, and keep it with the original agreement in their files.

"This agreement amends the Sharing Agreement dated __________ between Darren and David. This amendment is hereby incorporated into the original Sharing Agreement."

They both sign the amendment, make copies, and keep it with the original agreement in their files.

Addendum. An addendum is something you add to a contract when it is made. You might use an addendum if you are using a standard contract and want to add a provision that isn't included, or if you want to attach lengthy material but don't want to put in the contract itself.

Example: Darren and David have a long list of things they've agreed upon in terms of how care is provided to their children—foods the children can and can't eat, limits on television watching while the nanny is there, and the like. They put a reference to the addendum in the agreement, and then make a document that begins: "The following information is a part of the Sharing Agreement Contract dated __________ between Darren and David," and list the rules for care.

Attachment. An attachment is something that doesn't change the terms of the contract, but contains a list, schedule, or visual representation. A membership list or a schedule for use of an item can be attached to the agreement, with a provision in the agreement that says the attachment can be changed and that, if the new attachment is signed (or even initialed) by all the parties to the agreement, it becomes part of the original agreement.

Example: Darren and David have a list of information about their kids with things like allergies, doctors' contact information, and their current favorite games. They expect this list to change as the kids grow, so they make it an attachment that can easily be replaced when facts change.

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