Recently it has become a common question; "should my best friend and I buy a house together to share and be able to afford more home than on our own?" Immediately many would think this to be a great solution without any further consideration; however, there are serious considerations that have to be made before making such a decision. Among these considerations are: legal ownership, mortgage management and future goals.
A transaction as large as a house is always a big decision and commitment whether alone, in a family or in a mutual partnership. Open discussion about all questions that come up is advisable as well as a plan of action for things that may come up. What will the situation be if a partner wants out due to marriage? What happens if there is an irrevocable end to the friendship? What will the course of action be if one partner faces dire financial circumstances? Co-ownership can be affected by all of these situations. This does not mean it is not a viable option with all things contractually worked out.
Legal Ownership: Most states consider the legal ownership of a partnership on this scale as TIC, tenancy-in-common. TIC is given the freedom to customize their shared ownership agreement to their desires and needs. Generally details of the division are writ into the agreement; most commonly on a 50/50 percentage basis. The agreement can state that the owners have first opportunity to purchase the other owner's percentage should one choose to leave or that the home would be put up for sale and then divided by percentage. This is really the easy part of TIC, more difficult agreements are based on the division of the home maintenance, utility costs, upkeep and other home related decisions. All of these considerations need to be worked out in the TIC agreement before obtaining the mortgage.
Mortgage Management: In a tenancy-in-common you have two mortgage options available; all intended owners can apply for one mortgage loan together. In this situation, any one person defaults on the loan all owners are equally affected. The owner who faithfully pays his or her share of the mortgage can end up with credit problems if the other owner does not pay his or her share as responsibly. This could even lead to the entire home being foreclosed on. The second option is to apply for a fractional ownership loan, which is also called a TIC loan. Each intended owner would apply for and commit to a mortgage separately and each mortgage would be secured for their personal share of the property. With this mortgage type one owner's problems do not affect the other's credit or ownership.
Fractional loans are hard to find and harder yet to qualify for. Educating yourselves completely and having a plan of action for every step of the way will help you in your endeavor. Although more difficult a TIC is not an impossibility and is a viable way to become a first time homeowner.
For the residents of a trailer park in Olympia Washington the threat of eviction vanishes as they own their homes. The residents of the park in Olympia were soon to be evicted and lose all they had invested in their homes when a large sum of money was demanded to keep their homes; a feat that was out of reach for all of the residents. The 30 College Street Mobile Home Park residents were told they had to pay $95,000 each for their lots or they would be evicted. Unbelievable distress turned into cooperative hope and then unimaginable joy of success when the residents banded together for a common goal.
Just 10 months after the demand for the money the residents of the park formed a cooperative and raised $1/7 million. With the help of federal, state and county grants as well as low-interest loans the residents are looking forward to signing off on the deal September 12, 2008. The residents will move from soon to be evicted renters to first time home owners by working towards a common goal.
According to a public interest lawyer with the Columbia Legal Services of Seattle, most of the residents would be without a place to live if it were not for the deal they came together to make. The deal turned out to be a win-win for everyone involved. For the residents who did not own their homes prior to the deal they are not new home owners and have been given a sense of accomplishment and success. The residents who already held mortgages on their homes but did not own the property faced losing their investment if they had to move their trailer off the property; most would end up in the dump.
These residents received a sense of relief and a lifting of the stress and worry that plagued them for months. For all of the residence who was saved from eviction they have been given an experience of a lifetime as neighbors are brought together into a big family. According to one resident, "It's been a real joy to participate in this kind of experience."
The Olympia Park, once named College Street Mobile Home Park is now renamed. The park is now called Hidden Village and it is the first park in the state to benefit from a new manufactured home program. The new program was established by Washington's Housing Trust Fund. The former owner of the park property was also the first to receive a tax waiver; the waiver was approved by the Legislature to provide more incentives for park owners.
The goal of the tax waiver is to entice park owners to sell the property to the residents instead of selling to developers. By selling to the residence many families are spared from eviction and are able to continue their lives as home and property owners.
Land values have been exploding and this has led to the closure of hundreds of trailer and manufactured home parks around America. Landowners have cashed in by selling the property to developers. In Washington State alone, nearly 90 mobile home parks closed between 2002 and 2006. A representative from a nonprofit says "So many manufactured home parks are closing around the state that we're losing valuable affordable housing. It's more cost effective to save this housing than to build new affordable housing." This representative played a role in helping the residents organize their push to purchase the park.
This story has a happy ending for these 30 residences but the story has not ended so well in many other parks that have sold. Perhaps with this wonderful success story others will have pick up on the drive to own and the new legislation will give the park owners incentive to sell to the residence and not the developers. Again a win win for all.
Jennifer Stromsteen has sinced written about articles on various topics from Real Estate, Brain and Anger Control. J Stromsteen has many years expertise in the finance, real estate, and insurance industry. She contributes to various websites such as where. Jennifer Stromsteen's top article generates over 74000 views. to your Favourites.