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  • Writer's pictureRoch Clapp

Reducing Disputes With Joint Ownership

A situation on the rise in our practice is the growth of joint ownership between – parents and children, siblings, extended family and third parties. With growing interest rates and increased property values around the country, joint ownership appears as a cost-effective option for many families. Joint ownership comes in several forms such as co-owning a primary home, cabin, or rental properties.

Some common pitfalls we urge our clients to consider as it relates to joint ownership are the following:

1. Liability. Each owner may be held liable for any damage caused to the property or its surroundings. This includes accidental damage, negligence, or failure to adhere to the property's rules and regulations. If the property is rented and a guest or visitor sustains an injury while on the property, the owners may be jointly liable for any resulting medical expenses, legal claims, or damages. This liability extends to accidents that occur both inside the residence and on its premises, such as slips, falls, or other mishaps.

2. Shared Costs. Joint owners are typically responsible for their share of the property's expenses, including mortgage payments, property taxes, insurance premiums, maintenance costs, and repairs. Failure to fulfill these financial obligations could result in legal action or disputes among co-owners.

3. Disputes Among Co-Owners: Conflicts and disagreements among joint owners can lead to liability issues if they interfere with the proper management, maintenance, or use of the property. Resolving disputes promptly and amicably is essential to prevent legal complications and preserve the value of the investment.

4. Consider the Impact of Death, Divorce or Bankruptcy. When a joint owner dies, and there is no proper planning, then the decedent’s interest in the residence may be subject to probate and ultimate sale of the residence to the disadvantage of the other joint owners. If a co-owner goes through divorce or bankruptcy, then the property may be subject to debts and liabilities of the other joint owner.

Fortunately, there are several options to help mitigate disputes or unforeseen issues as it relates to joint ownership and real estate.

1. Real Property Agreements. These Agreements outline and confirm the legal interest each party has in a certain residence, the responsibility of upkeep and payment of expenses, and can even confirm the disposition of the property on the death, divorce, or disability of a co-owner.

2. Limited Liability Agreements. An LLC is a useful tool for family cabins, rental properties, or other land that is owned by several individuals. The LLC can provide for buy-out structures in the event someone dies, obtains a divorce, and the method on transfer or buy-in of new members. The LLC, if used appropriately, can also help shield personal liability that may arise out of the operation of the property.

3. Use Agreements. Sharing weeks with multiple owners in a cabin or other structure typically follows a predetermined schedule agreed upon by all owners. These agreement outline the terms and conditions of usage, maintenance responsibilities, financial obligations, and rules for scheduling usage. The most common method for sharing weeks is to establish a rotation schedule where each owner is assigned specific weeks or periods throughout the year. This schedule can be yearly, seasonal, or based on other preferences agreed upon by the owners.

To mitigate the above issues, joint owners should establish a comprehensive ownership agreement that addresses potential risks, outlines responsibilities, and establishes protocols for managing liabilities and contemplates transfers on death. Consulting with legal and insurance professionals can also help identify potential risks and implement strategies to protect against liability exposure. Additionally, maintaining open communication and cooperation among co-owners is crucial for effectively managing and mitigating liability issues in a joint ownership arrangement.

This article is not intended to replace legal advice applicable to your situation and should be used only for informational purposes. Consult with your legal or tax advisors before implementing any suggestion contained herein. Ms. Clapp-Younggren is a shareholder with the firm of Sandra L. Clapp & Associates, P.A. and can be reached at or (208) 938-2660.

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