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Property Sharing Agreements

04 October 2019

It’s a Kiwi dream to own our own home, but with the ongoing increase in house prices, New Zealanders are changing their approach to purchasing property, and also turning their minds to using property sharing agreements.

A property sharing agreement (PSA) is a contract between two or more owners of a property. It’s a document intended to cover both the parties existing arrangements regarding the property and also to provide for what may happen in the future with the property.

A PSA can be adapted to suit a wide range of circumstances where people are intending to co-own a property.  For example:

  1. Parents and adult children who are purchasing a property for them all to live in and where everyone will contribute to the purchase price;
  2. Parents who are helping their child to fund the purchase price and intend on having an ownership interest in the property to reflect their contribution;
  3. A group of friends who are pooling their money to purchase a property to live in together;
  4. Two families who are wanting to purchase a beach home to be used by both families from time to time;
  5. Property inherited by siblings from their parent’s estates.

 

A PSA can be flexible and drafted to suit the particular circumstances of the parties.  It may include the following:

  1. The legal ownership of the property (which may differ from what is registered on the land title);
  2. The person/s who are going to occupy the property;
  3. How ongoing ownership costs of the property are to be paid such as rates, mortgage and insurance;
  4. How the services costs of the property are going to be paid such as water, telephone, power, internet and other service costs;
  5. How routine and one off repairs and maintenance costs for the property are to be dealt with and paid for;
  6. The process for resolving disputes between the property owners;
  7. The process for owners to sell the property or buy each other out of their shares in the property.

 

A property is a significant asset and therefore it’s important to receive the best advice about how to acquire and protect your property and how to deal with ongoing costs associated with a property when purchasing with friends or family.

To give yourself comfort that you are covered if disputes arise, talk to your solicitor about drafting a PSA to suit your circumstances.

 

 Glenda Graham is a Partner in the Private Client Team at Norris Ward McKinnon. You can contact Glenda at glenda.graham@nwm.co.nz

Glenda Graham