It’s often said that blood is thicker than water.
With that in mind, I often have two family members express an interest in buying a duplex together. Each intends to live in one of the units.
Sometimes the buyers are a grown child and a parent who winters in warmer climates.
Sometimes the buyers are siblings.
In one case I even encountered a former husband and wife who saw a duplex as a way to co-parent their children, but continue on with their respective lives.
Sharing a multifamily property can be a workable solution for some people. And while family may well look out for each other’s interests more reliably than friends or acquaintances, it’s important to remember life circumstances can change.
And that’s why deciding how your going to take ownership at closing is so very important.
There are two ways a pair of buyers can take title; either as joint tenants or tenants in common.
The most commonly used form of title taken by two or more people who are related is joint tenancy.
In this form of ownership, each party’s interest is undivided. Neither may sell his or her interest without the consent of the other. And, in the event that one of the owners dies, the surviving owner or owners automatically inherit the deceased person’s interest in the property.
Parties who take title as tenants in common, on the other hand, may not only sell their share of the property to an unrelated party without their co-owner’s permission, but in the event of their death, will their share to their heirs.
Before you decide how to take title, it’s important you consider the worst case scenarios.
For example, I recently had a duplex owner contact me who co-owns a property in a desirable neighborhood with a family member.
One of the owners is ready for single family home ownership; largely because the other owner is unable and/or unwilling to kick in monies toward maintenance and repairs on the property.
Knowing a big ticket repair is on the horizon for the duplex, the owner wanted to know of any way he could either force his cousin to sell, buy him out, or contribute toward the cost of repairs.
Unfortunately, as the two had taken title under joint tenancy, my first recommendation was to contact an attorney.
However, had they taken title as tenants in common, it’s possible the party who wants to sell would have more leverage. For instance, he could sell his ownership in the property to a third party, over the objections of his co-owner.
Sometimes marriages end; sometimes siblings part ways. That’s why it’s important to consider even the worst case scenarios when buying property with a friend or family member.