Avoiding Costly Mistakes in Tenants in Common Agreements
Introduction
Tenants in common agreement comes with its cost, responsibilities, and regulations — like any other document. A lot has been said about the importance of tenants in common agreements, so it's time to speak of saving money when entering into such agreements. And the best way to save money is to create a bulletproof contract for tenants.
Today we will discuss the most common questions: What is the tenants in common agreement cost? What are the common mistakes to avoid when dealing with tenancy? How to get tenants in common agreement using a template? Where to find a lawyer to help you out with the legalities? If you're ready to learn more about the ins and outs of tenants in common agreements, read on.
Understanding Tenants in Common Agreements
All business relationships with people should be solved with special documents, just like tenants in common agreement. This document prevents costly mistakes, regulates relations among all tenants in common, and ensures stability and the absence of disputes between parties. Overall, the tenants in common agreement cost is much lower than the amount that parties may have to spend to resolve issues in the absence of such a document. Also, the tenants in common agreement clearly indicates the moments of transferring the part in case of the co-owners death or emphasizes the system of repairing or renovating the residence and who is responsible for it all.
Speaking of tenants in common agreement cost, let's imagine tenants in common agreement where tenants have a different share of ownership. If this property needs repair, how will the parties regulate expenses? Will the parties pay equally, or will the one who has a higher percentage of ownership take on more expenses? The tenants in common agreement is created specifically to avoid headaches and disputes related to resolving these issues.
So, what usually includes a tenants in common agreement:
Ownership interests: The first important thing for a tenants in common agreement is to indicate each co-owners ownership interest in the property.
Responsibilities for expenses: As mentioned earlier about tenants in common agreement, the expenses of all the sides should be clearly indicated: who pays taxes, deals with mortgage payments, and repairs. Especially if tenants have a different percentage of ownership, these questions should be covered in your tenants in common agreement.
Dispute resolution: To avoid problems and additional expenses, a tenants in common agreement should include provisions for resolving disputes.
Distribution of profits: If the property can generate income in some way (for example, if some apartments are rented out), the tenants in common agreement must include a part that will clearly indicate how this income is divided among the parties. In this way, tenants in common agreement cost increases together with the income tenants get.
Transfer of ownership: Also standard for a tenants in common agreement is a part that clearly regulates how tenants transfer their parts — in case of death, as a gift, or sale.
Termination of the agreement: Like all business agreements, a tenants in common agreement should regulate the issue of termination or extension of its existence.
Finally, one thing to pay attention to when assembling your tenants in common agreement is to specify how often and under what conditions the contract should be reviewed and updated. This way, owners will not be bound by terms that have not been relevant for 15 years.
Mistakes to Avoid in Tenants in Common Agreements
When drafting tenants in common agreements, all parties must ensure that the document addresses all possible problems that may arise among tenants. This way tenants in common agreement cost will remain on an adequate level.
Let's go through some obvious and not-so-obvious details that need to be checked when creating tenants in common agreements.
Not having a written agreement: A verbal tenants in common agreement is as good as no contract at all. Even if you know all the co-owners and are "friends" or simply "trust" each other, tenancy is a business, and you need to document your relationship with a tenants in common agreement.
Failing to define ownership interests: From the outset, all tenants must decide and establish clear ownership guidelines. This includes situations such as one tenant selling their share or adding new tenants to the group.
Inadequate provisions for maintenance and repairs: Once ownership is established, you need to regulate how repairs and maintenance will be handled. Therefore, the tenants in common agreement must specify who is responsible for costs and how decisions will be made, who manages regular inspections of the property to identify any issues that need to be addressed, and how often these inspections occur.
Failure to address potential disputes: The tenants in common agreement must include provisions for possible mediation or arbitration in case of disputes. Such a provision can save parties from lengthy and expensive legal battles — proving that tenants in common agreement cost less than the cheque you get from a lawyer.
How to get tenants in common agreement with the best cost-quality ratio? Tenants-to-be have three options: check examples of such contracts, consult a legal specialist in property law, or use a tenants in common agreement template created by lawyers and available to everyone.
Self-research is cheap but requires a lot of attention, an understanding of jurisprudence, and analytical skills.
Working with a lawyer will be personalized but will take time and incur additional costs.
Using templates is a quick and inexpensive way to obtain a document that has been professionally created by lawyers, but you need to carefully fill in all the fields of the document.
Whatever option you choose to create your tenants in common agreement, always ensure that the contract you create complies with the requirements of your state.
Conclusion
Tenants in common agreement cost may change according to the tenant’s situation, specifics of the property, or conditions on the market. But in general, tenancy in common is a great option for those who want to own property but also have a more secure position compared to sole ownership.
The tenancy is a convenient and beneficial way of ownership that does not require extensive preparation or specific knowledge. The only thing tenants need to do is create a tenants in common agreement, which will regulate all matters and areas of responsibility of the parties. And if the tenants in common agreement is done correctly, then all parties can be assured that they are saved from 99.9% of the problems that may arise during joint property ownership.
Secure your tenancy with a ready-made agreement
Inna Chumachenko is the Content Lead at Lawrina. She is responsible for managing all the content found on the blog, guides, and other website pages. Inna has a degree in philology and a vast interest in law. In her role at Lawrina, Inna oversees the content team, establishes collaborations with writers, and curates content from various contributors.
If you have any questions or suggestions regarding the content for Lawrina, please feel free to contact Inna directly via email at i.chumachenko@lawrina.org or connect with her on LinkedIn.
Frequently Asked Questions
Generally, each situation and property differs from one another, so the exact price can be provided by a lawyer when they issue you an invoice for their services. Analyzing the U.S. market in 2023, it can be said that if you choose to hire a lawyer to create a tenants in common agreement, the cost could range from $500 to $2,000 or more.
Tenants who want to create a tenants in common agreement quickly have the option to use a template, which typically costs between $50 and $200.
For a tenants in common agreement to be legitimate, it must include all necessary provisions and comply with the laws of the state in which it is located. Also, all co-tenant participants must sign this agreement. Regarding the tenants in common agreement template, it should be created by lawyers and updated according to the latest legal practices to be legit.
Tenants in common and joint tenancy are two ways to co-own property. In short, tenants in common have a certain percentage of ownership, and they can easily transfer, sell, or gift their share. Joint tenancy includes the right of survivorship, meaning if one tenant passes away, their share transfers to the other owners of the property.