Shared homeownership can be a fulfilling and financially savvy way to own property, but it requires clear agreements and mutual understanding among (co)owners. Tomi helps groups of aspiring (co)owners get aligned on the plan before diving in.
Here are the five most crucial terms to reach consensus on:
One of the key aspects of shared homeownership is determining how financial decisions will be made. This includes decisions about:
(Co)owners should agree on a clear process for making financial decisions, which may involve regular meetings, voting systems, or appointing a financial manager. Transparency is critical; all (co)owners should have access to financial records and an understanding of how funds are being used. Establishing joint bank accounts for mortgage payments, expenses, and incidentals can help ensure a more open and structured framework for managing financial decisions as a group.
It's essential to have a predetermined process for what happens if a (co)owner wants to sell their share of the property. Tomi offers a clear path and procedure here and uses AI to help manage the process (contact us to learn more). This includes outlining the steps for finding a buyer, how the property will be valued, and whether existing (co)owners have the right of first refusal. Agreeing on a fair method to determine the property's value—whether through an appraisal or a mutually agreed formula—can prevent conflicts. Additionally, setting a timeline and process for the sale helps manage expectations and ensures a smooth transition.
You're not going to see eye to eye with your (co)owners on everything, so having a clear conflict resolution process is vital. (Co)owners should agree on a method for resolving disputes, which should include a voting mechanism, mediation, and even arbitration. Establishing a process for regular communication, such as monthly owner meetings, can help address issues before they escalate. Clearly defining roles and responsibilities in the household can prevent misunderstandings and reduce the potential for conflicts.
Defining a vision for the shared home is one of the first items you should plan to discuss with your prospective (co)owners. It's one reason we include the capacity tracker on our (co)ownership calculator. Are all (co)owners planning to live or spend time there together, will you be alternating weeks, what happens if an owner wants to have a guest stay for an extended period of time or someone get married!? Agreeing on the type of living arrangement, the use of common and private spaces, and things like the guest policy are crucial in the early stages of designing your shared home.
As circumstances change, the need to update or change the rules governing the shared home may arise. (Co)owners should establish a flexible but clear process for making amendments to their agreements. This might involve regular reviews of the agreement, a required majority for approving changes, and a method for proposing new rules. Having a written agreement that can be easily updated ensures that all (co)owners are aware of and agree to any changes, maintaining harmony and clarity within the shared ownership arrangement.
Designing a home (co)ownership plan takes time. But reaching consensus on these five key terms:
Will serve as the foundation for a successful shared homeownership. At Tomi, we help groups navigate these critical to ensure all (co)owners are aligned and prepared for a smooth and rewarding shared living experience.
Schedule your free (co)owner consultation today!
