Buying a property is a milestone for someone. It can be a difficult journey to take but one that is fulfilling. In some cases, some people choose to buy a property with someone else. Many people are not aware that it is a different matter when buying a property by yourself and buying a property with someone – this is called co-ownership.
Co-ownership is exercising the same ownership rights as someone for a property. It has its own legal and financial process that is different from just buying a property by yourself. And while it can be exciting and realistic to buy a property with your lover, business partner, relative, or friend, it might create emotional and financial stresses in the long run.
Keep in mind that “each co-owner will have full ownership of his part and of the fruits and benefits pertaining thereto, and he may therefore alienate, assign or mortgage it, and even substitute another person in its enjoyment, except when personal rights are involved.”
How will you know who to choose as co-owner?
When buying any piece of property with a co-owner, a document called “title” and “deed” will detail how you and your partner will be sharing the property. This is helpful especially when self-interest has changed or with the demise of a co-owner.
There are two common types of co-ownership and their nature will help you decide who to choose as a co-owner:
Joint Tenants With Right of Survivorship (JTWRS)
When the co-owners of an undivided property and that no particular tenant owns a portion of the property since all tenants own the property in common. This is a 50-50 sharing of the co-owners, where both of the co-owners have equal rights of the property. When one of the co-owner dies, his share will automatically go to the living co-owner.
This is such in the cases of spouses’ ownership of the family home. If you purchased your home with a spouse both you and your spouse will have the “right of survivorship”. If one spouse dies, the entire house will go to the surviving spouse and/or heirs.
Tenancy in Common On
This allows the co-owners to have unequal rights or interests to the property. This is when a co-owner owns a specific portion of undivided property. This is helpful if one tenant dies, the share will go to his/her beneficiary and not to the partner. This works best if one of you invested more money on the property than the other one.
Each co-owners are entitled with the rental income and ownership just in case one of you decides to rent the property out.
Things you need to sort out before getting into co-ownership:
- Draft a co-ownership agreement
- Make sure to have some ground rules to prevent or escape any conflicts that may include emotional and financial problems.
- Get yourself a lawyer to prepare the needed documents and draft an effective agreement.
- Discuss if when one wants to dissolve the interest (especially for Tenancy In Common)
In the Philippine setting, however, due to the complexity of legal processes co-ownership is only encouraged to your bloodlines, preferably immediate relatives. Lovers or unwed partners are not encouraged to enter into co-ownership for properties to prevent bigger problems in the future in the event the two separates.
Philippine banks and lending institution accepts co-ownership for siblings, parents and/or spouses of married couples. Second-degree relatives may be considered, however, both parties needs to fully understand the binding contract that they will be entering.