You absolutely must put your co-ownership plans in writing. If you don't have a written agreement and a problem develops that you can't resolve on your own, a court might wind up making important decisions for you, or even ordering the property sold. Because the legal requirements for house co-ownership agreements vary by state (such as rules for taking title as tenants in common)—and because your shared home represents a big economic investment—you should hire a lawyer to help you prepare an agreement that meets your needs.
Here are the topics your house co-ownership agreement should cover:
- Who will buy the house?
- When will the owners buy the house?
- How will owners take title?
- What are the ownership percentages?
- What is the purchase cost?
- How will the down payment be divided?
- How will the mortgage payments be divided?
- What happens if one person is unable to make mortgage payments?
- What if one owner wants to refinance or borrow against equity?
- How will other costs be divided (taxes, insurance, utilities, maintenance), and what happens if someone can't pay?
- Who gets to use what part(s) of the house?
- What are each owner's responsibilities for upkeep, maintenance, and cleaning?
- What about subletting and guests?
- What if one owner wants to leave? Will the other owner have a right to buy that person's share before it's offered to someone else? How will you determine the value of that owner's share for purposes of the buyout?
- What if both owners decide to end the arrangement? Who has the right to buy the other out?
- How will costs and profits be divided if the house is sold?
- What happens if one owner dies?
- How will the owners resolve disputes?
The Living Together section of Nolo, under Marriage & Relationships (in the Divorce and Family Law section) includes sample contracts for unmarried people who want to share ownership of a house under various arrangements, including:
- Contract for Equal Ownership of a House
- Contract for Unequal Ownership of a House
- Agreement for One Person to Move Into the Other’s House and Become an Immediate Co-Owner, and
- Agreement for One Person to Move Into the Other’s House and Become a Co-Owner Gradually.
These contracts cover most of the financial and legal issues listed above. You’ll probably want to prepare a separate attachment regarding house rules, such as guest policies and cleaning responsibilities.