At the moment there are 5 of us. Three with varying amounts of capital. The plan is that we all pay equal shares of the bills. Is there any guidance on how we would go about buying a property between us? Are there pre-made schemes available? How should we handle the situation of one person moving out or others moving in? Are there any legal issues we need to be aware of?
2007-03-07 01:32:37 · 6 answers · asked by waycyber 6 in Business & Finance ➔ Other - Business & Finance
Well, the problem that arrises is "title" of the property, and property ownership rights. If all 5 of your friends were to try and purchase a house, you would need financing. Assuming that you all have outstanding credit, great income to show, and ability to pay the monthly payment as a percentage lower than 28% of your monthly income, there should be no problem.
The problem with that, is that all 5 of you are probably not in that rosey situation for some reason or an other. This will make the transaction nearly impossible. The suggestions with advises that one of you be the owner of the property, while the other 4 invest their money but hold no legal claim on the title of the property, is a bad suggestion. Suppose one of your friends leaves, suppose it is you! What guarantee do you have that you earn your money back? What part of the property you paid money for do you own? NONE!
The alternative to this, is that you do not purchase the house as 5 seperate legal entities. You can instead chose to purchase the house as a joint and single business entity. Namely, a Partnership. That is in effect what all 5 of you plan to be, partners in crime so to speak.
You will need to get chartered, think of a name, draft up an agreement that allocates equal shares of profits and losses according to initial investment of each partner, and what can take place in the event one partner leaves..
The bank or any other lending institution will be more willing to give you a loan, and the title or ownership of the property will be in the name of the partnership. Keep in mind, under common law legal theory, which includes the UK, when one partner leaves, the partnership agreement resolves, which means the partnership resolves, which means that the house will not be owned by a non-existant entity anymore! Beware of this! In the event a partner leaves, you should allocate that partner's interest to the other partner's equally in the same ratio they shared profits and losses. You may find a new partner some time in the future, which can hopefully buy a portion of the partnership interest the rest of the 4 of you will hold.
The important thing is that you caution yourself and be prepared in the event that a partner exits (either by choice or death), and that the partnership is not allowed to dissolve and have no bearing or claim on the ownership of the house.
Talk with a lawyer on this one. I'm not familiar with UK laws, but it would be what I would recommend to someone in the states..
Good day then,
2007-03-14 04:43:44 · answer #1 · answered by Felix 3 · 0⤊ 0⤋
You need to see an attorney and a contact can be written up and signed by each of the participants. This contract can lay out all the responsibilities of each. This is a business deal. If you just try to treat this like a friendship deal. the friendship will be gone soon. This legal document will formalize what to do when you disagree. I would include some method of arbitration when something comes up not included in the original contract. Each will have more fun when you know what is expected. Also this way one person is not stuck with more than they should be and the slackers know what they are legally responsible for. Good Luck.
2007-03-07 01:49:04 · answer #2 · answered by al 6 · 0⤊ 0⤋
Or have one person be the official owner and the rest of the people pay that one person. That way, if one of them leaves, you can just find someone else to come in instead of having to transfer ownership of the house. I'm about to do that with the five guys I live with in a house. I'm going to buy and then rent out the rooms to others. I've heard it works well.
2007-03-07 01:43:14 · answer #3 · answered by johnny_zone 2 · 0⤊ 0⤋
I would definitely seek the advice of a lawyer this can effect your credit if someone bails out, or doesn't stick to his/her share of responsibilities. The last thing anyone needs is to be left with the entire bill. If you never purchased a home their is such a thing as first time home buyer's loans they are easier to help get a home even alone.
2007-03-15 02:20:53 · answer #4 · answered by tifferl 1 · 0⤊ 0⤋
Yes see a lawyer. I suppose you all need to sign the legal papers and be owners together. Good Luck.
2007-03-07 01:36:46 · answer #5 · answered by Anonymous · 0⤊ 0⤋
get yourself a good conveyancing solicitor and let him guide you
2007-03-07 01:37:06 · answer #6 · answered by srracvuee 7 · 0⤊ 0⤋