Buying with friends requires an agreement prepared by a conveyancing solicitor
With the high cost of residential property, young people may consider buying with friends as a means of starting on the housing ladder; but the services of an experienced conveyancing solicitor are essential to protect all those involved.
Up to four individuals can join together to buy a home if they obtain suitable finance between them and each can own a share of the property, depending on how much they contribute.
Specialist mortgage brokers can source mortgage finance and an experienced conveyancing solicitor will need to be instructed to not only arrange the usual contracts and searches but also prepare a legal agreement setting out the rights and obligations of each of the co-owners.
Among the clauses which are likely to be included in such an agreement are the share each owner has and the percentage of the mortgage for which each is responsible.
If one or more of the owners wishes to sell, they must first offer their share to the remaining owners at current market valuation. They will then have to apply to the mortgage lender if this will be acceptable.
If the remaining share owners do not wish to buy, or the mortgagor will not increase the lending to them, then the share may be offered on the open market. It may be that no purchaser comes forward, in which case the person who wants to leave can force a sale of the whole property and each co-owner will receive their due split of the proceeds.
When a co-owner wants to move out
A co-owner who wants to move out but retain ownership may be able to rent out their interest in the home.
Joint owners have to agree to set up and continue life insurance and mortgage payment protection cover to protect their shares on the home and arrangements will be in place should one of the owners die.
Provisions in the sharing agreement will also include the possibility of one of the owners defaulting on mortgage payments.
Although a joint bank account for mortgage and insurance premiums should be set up, it is important to realise that is one of the owners fails to pay their share, the other owners are legally liable for the whole of the mortgage payment due each month.
Having rented with fellow students during time at university, many young professional people are quite open to the idea of buying a home with friends and financially it can be far better than renting but with the numerous pitfalls outlined above, it is important to obtain advice from an experienced residential conveyancing solicitor who can explain all potential benefits and risks to potential home-owners before they commit to a purchase.
Sharing to buy and Healys solicitors of London and Brighton
London and Brighton, with their high property prices, have homes which are suitable for people to buy together and the helpful solicitors of Healys, who are able to work throughout the UK, are on hand with professional services for home buyers with a variety of needs.
Our team know that buying a first home can be a complex and confusing business but, with their attitude of open communication and cost-effective service, you can be sure of having everything explained in understandable terms.
There will be some extra costs in completing a legal agreement prior to undertaking a share to buy home purchase but you can be sure there will be no hidden fees and throughout you will receive the high standards of residential conveyancing services which Healys provides for all clients.
For more information and advice on costs of Healys’ conveyancing services, you can request a call-back via the website, or email Head of Real Estate Kiri Kkoshi at firstname.lastname@example.org.