What You Need to Know About Co-Ownership of Property

Considering all of the price increases, purchasing a home may appear out of reach, especially for young home buyers. However, if you are determined to invest in real estate, there are a variety of options available to help you beat the market price and high credit score requirements, such as co-buying or a co-ownership agreement.

What is co-ownership of property?

Property co-ownership means that more than one person has an ownership interest in a piece of real estate. Tenancy in common, joint ownership, community property, and tenancy by the entirety are all examples of co-ownership.

In the Philippines, co-ownership is also referred to as co-buying. This happens when two or more people buy a house and decide to split ownership. In a co-buying arrangement, the property co-owners could be a couple, a family, close friends, a group of people or businesses, or a combination of both. Being an owner is the same as being a co-owner, with the exception that the co-share buyer is proportional to his or her interest.

The legal procedure for co-ownership

When you become a co-owner of a property, you form a legal relationship. This is governed by a co-ownership agreement signed by you and your joint partners.

Tenancy in Common and Joint Tenancy are the two most common types of co-ownership agreements.

Tenancy in Common property

Tenancy in Common allows two or more parties to own a financial share of a property and transfer their interests independently. This provides a more flexible form of property co-ownership, allowing parties to own land in equal or unequal shares.

Joint tenants or full ownership

Couples have traditionally used joint tenancy. As a couple, these tenants own the entire property. This type of co-ownership includes survivorship rights, which means that if the other co-owner dies, the surviving tenant inherits the entire property.

The Benefits and Drawbacks of Property Co-Purchasing in the Philippines

Co-ownership, like other purchasing agreements, has advantages and disadvantages. Here are the benefits and drawbacks of a co-owned property arrangement:

The benefit of property owned through co-ownership.

• Capability to pool funds with friends or family to purchase your first home or enter the market as an investor sooner.
• There is no need to save up for a large deposit.
• You can pool your borrowing power to borrow the remaining funds from a loan provider.
• Increases the number of property options available to you.
• Reduces both transaction and living costs.

The disadvantages of property owned by two or more persons.

• Property co-ownerships can put your relationships to the test while also putting your finances at risk. Friendships change, and sometimes a squabble occurs, which can be disruptive and costly for the co-owner.
• If co-owners use the co-owned property as security for their mortgage, they are liable for each other’s debts.
• A co-owner may not always share ongoing costs, which can lead to conflict.
• One owner may wish to sell while the others do not.
• Co-ownership may have an impact on your future borrowing power because some lenders consider the entire co-ownership loan to be your responsibility, not just your share of the loan.

What are the rights of a co-owner in the Philippines?

• Right to a proportionate share of the benefits and charges associated with co-ownership
• Right to use the thing owned in common as long as it does not harm the co-interests ownership or prevent the other co-owners from using it.
• Right to file a legal action to evict occupants in a co-ownership.
• The right to compel the other co-owners to contribute to the expenses for the preservation of the thing owned in common, as well as taxes.
• Right to compel co-owners to pay a pro-rata share of the above-mentioned expenses and income.
• The right to partition real property at any time.
• The right to make changes with the consent of the co-owners
• The right to alienate, assign, mortgage, or substitute a portion of his or her shares or ownership.

The rights of a co-owner are essentially the same as the rights of an owner. The only restriction is that a co-owner must respect the rights of his co-owners. A co-owner must use the thing owned in common as long as it does not harm the co-interest ownership or prevent the other co-owners from using it. The underlying logic is that until a division is made, the respective share of each cannot be determined, and each co-owner exercises joint ownership of the property owned in common in addition to his use and enjoyment of the said property.

Can a co-owner sell his entire interest in the joint property?

An undivided co-ownership owner of the co-owned property is absolute. He is free to sell, mortgage, alienate, or otherwise dispose of the property. He might even have someone else join him in enjoying it. But once more, the restriction only applies if it doesn’t harm the co-interests ownership or prevent the other co-owners from using it.

An undivided co-ownership owner of the co-owned property is absolute. He is free to sell, mortgage, alienate, or otherwise dispose of the property. He might even have someone else join him in enjoying it. But once more, the restriction only applies if it doesn’t harm the co-interests ownership or prevent the other co-owners from using it.

Understanding co-ownership to make it successful.

Co-owning could appear to be an overwhelming idea given all the variables involved. Conflict can be avoided in some situations, though. You need a written contract describing the duties and obligations of each owner.

These records should be drafted by a real estate attorney and include the following information:

• What kind of title would you like for your home?
• Who will cover how much of the down payment and mortgage?
• What will be the distribution of the shares?
• In the event of a death, what will happen to the shares?
• If one co-owner is unable to make payments any longer, how will you react?
• How to proceed if a co-owner wants to terminate the partnership?

As long as you establish clear guidelines with your co-buyers and seek legal advice, co-buying doesn’t have to be as complicated as it might sound. In order to afford their preferred property, more young homebuyers choose co-buying agreements as the cost of homes continues to grow.