Equity Sharing Agreements To Buy Another Property
Equity sharing agreement - what to consider before signing on the dotted line
When it comes to buying property, there are a number of different ways to go about it. One option is to enter into an equity sharing agreement with another person or persons. This can be a great way to get onto the property ladder, but there are a few things you need to consider before signing on the dotted line.
In this article, we'll take a look at what an equity sharing agreement is, as well as some of the pros and cons. We'll also give you some things to think about before entering into such an agreement.
What is an equity sharing agreement?
An equity sharing agreement is basically when two or more people agree to buy a property together. The agreement will set out how the property will be owned, as well as how any profits or losses will be shared.
There are a number of different ways that an equity sharing agreement can be set up, so it's important that you get legal advice before entering into one.
Pros and cons of an equity sharing agreement
There are both pros and cons to entering into an equity sharing agreement. Some of the pros include:
• You may be able to buy a property that you otherwise wouldn't be able to afford on your own.
• You can share the risk of buying a property with another person.
• You can share the costs of buying a property, such as the deposit, stamp duty and legal fees.
Some of the cons of an equity sharing agreement include:
• You will need to agree on everything with the other person or persons involved in the agreement. This can sometimes be difficult to do.
• If the property value goes down, you may end up having to sell the property at a loss.
• If one of the people involved in the agreement wants to sell the property, the other person or persons may have to agree to this.
Things to consider before entering into an equity sharing agreement
There are a few things you need to think about before entering into an equity sharing agreement. These include:
• Who will be responsible for paying the mortgage?
• What will happen if one of the people involved in the agreement wants to sell the property?
• What will happen if the property value goes down?
• What will happen if one of the people involved in the agreement dies?
• What will happen if one of the people involved in the agreement wants to move out?
Getting legal advice
As we mentioned above, it's important that you get legal advice before entering into an equity sharing agreement. A lawyer can help you understand your rights and obligations under the agreement, as well as draft or review the agreement.
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