Before the close of a real estate purchase, buyers will typically consult their lawyer to understand how they will take title to their property. However, titled ownership alone may not fully address property management when co-owners are involved. For instance, as a co-owner, you may need clarity on your rights and responsibilities with respect to covering daily property expenses, safeguarding down payment contributions, obtaining consent for property renovations, or sharing maintenance costs, as a few examples. With these considerations in mind, here are three (3) types of agreements you could discuss with your real estate lawyer to enhance your property ownership:
Bare Trust Agreement
A Bare Trust Agreement can establish that one party, the trustee, holds the legal title to a property for the benefit of another party, the beneficiary. The trustee will typically hold a passive interest in the property, without an active involvement in managing or making decisions about the property. Therefore, the trustee will typically hold their interest in the property without obligations except to convey their interest in the property to the beneficiary or to a third party as directed by the beneficiary. This type of agreement could be used to clarify ownership arrangements when beneficiaries require a trustee as an additional owner to qualify for financing in real property transactions, for example.
Co-Tenancy Agreement
A Co-Tenancy Agreement can establish property ownership terms and usage rights among co-owners, also known as “co-tenants.” This type of agreement could specify terms, including but not limited to:
- Financial Contributions by the co-tenants towards the property’s purchase;
- Shared costs between the co-tenants for property upkeep, repairs, and expenses such as property taxes, insurance premiums, and utility bills;
- Rules and responsibilities concerning the property’s common areas;
- Defining the process for making significant decisions, such as selling the property, leasing all or part of the property, property alterations or renovations, and whether unanimous consent is needed from all or some of the co-owners as to these decisions;
- Provisions for a first right of refusal for buyouts by co-owners; and
- Procedures for managing and resolving conflicts and facilitating the termination of the co-tenancy agreement.
Therefore, this type of agreement could be effective when you intend to own a property collectively with others. Each owner could receive the assurance that their expectations will be formally documented and managed through this type of ownership agreement.
Joint Use and Maintenance Agreement
A Joint Use and Maintenance Agreement, also known as a “JUMA” can outline the rights and responsibilities of adjacent owners who share property, like a laneway, driveway, or a common wall, for example. A JUMA will typically outline how the shared property will be utilized, maintained, and repaired, along with how the associated costs will be divided among the owners. If you are an owner with shared property and will be selling in the future, a JUMA could provide potential buyers a clear understanding of their obligations regarding the shared property.
These three (3) types of agreements could offer clarity on co-owners’ rights and responsibilities, thereby mitigating conflicts, disputes, and misunderstandings. They can apply to residential and commercial properties. If you already own property or are considering buying a property with others and you want to protect your ownership interest, consider consulting a real estate lawyer to discuss your rights and responsibilities with co-owners.
This blog post was written by Brandon Doughty, a member of the Real Estate and Wills and Estates teams. He can be reached at 613-369-0364 or at [email protected].
