How’s the real estate market? Joint ownership questions answered – Lake County Record-Bee
I recently received questions about owning real estate through a partnership. specifically, how to leave a holiday home to two children. Admirably, the owners wanted to minimize the likelihood of hard feelings between their adult children.
My advice to you? Encourage your children to treat property ownership as they would any other business relationship. Write everything in writing.
Another way to keep things running smoothly is to hire a single manager to take care of things like loan payments, property taxes, and insurance.
And if you can see points of friction from a mile away, it’s best to treat them in advance. Vacation homes are of great value on special days such as bank holidays and birthdays and at certain times of the year such as long weekends in winter for skiing or in summer when children are out of school.
With a little compromise, anyone can get something they want. Maybe you exchange Christmas every year or everyone goes to the hut to celebrate Christmas together. While creating the calendar may be a bit controversial, it’s done.
It’s best to budget for around 3 percent of the property’s value annually for maintenance, taxes, insurance, and other unexpected expenses. By setting up a joint checking account and the monthly payment of each share by each partner, expenses can be covered on time and with minimal stress.
Another way to relieve stress is through a buy / sell agreement. If only one partner wants to sell, it is still best to hire an appraiser to assess the fair market value as if the property were being sold in full. This gives a different value than selling half a stake.
Changes in ownership can raise interesting legal issues. What starts out as a clean 50:50 split between two siblings quickly becomes complicated when it comes time to pass the property on to the next generation. How many ways can you share a property? What is a fair split?
In one example, three families bought 160 acres of coastal recreational land to use as a weekend getaway. The property had three residential areas, one for each family, and the owners immediately saw potential problems with future generations. If every family had three children, there would be nine owners, but still only three residential areas. So they drafted a partnership agreement that agreed to transfer their stake in one child to one child at a time, limiting the number of owners to three on a permanent basis.
With a little planning, you can give property to your children and their children without starting rivalries like the one between the Hatfields and McCoys.
If you have any questions about real estate investments, please contact [email protected] or call (707) 462-4000. If you have an idea for a future column, let me know. If I use them, I’ll send you a $ 25 gift certificate to Schat’s Bakery. To see previous articles, visit www.selzerrealty.com and click How’s the Market.
Dick Selzer is a real estate agent who has been in business for more than 45 years.