This land co-ownership agreement is between
The parties own real property, and improvements on that property, located in the county of
The parties want to enter this agreement to (a) provide for the orderly administration of the Property, (b) set forth their rights and obligations to each other and to others and (c) delegate authority and responsibility for the intended future operation and management of the Property.
The parties therefore agree as follows:
1. OWNERSHIP AND TITLE.
3. DECISIONS.
4. INCOME AND LIABILITIES.
Each party will be entitled to all benefits and obligations of ownership of the Property. Specifically, each party shall:
5. OBLIGATIONS.
6. SALES OF PROPERTY, INTERESTS.
7. TERMINATION.
This agreement shall become effective on the effective date described in section
8. TAX MATTERS.
The parties intend to be excluded from the provisions of the Internal Revenue Code relating to partnership reporting requirements. The parties shall report their respective shares of the items of income, deduction, and credit on any required income tax returns in a manner consistent with the exclusion of the Property from those provisions of the Internal Revenue Code.
9. DIVISION OF PROFITS AND LOSSES.
Except as otherwise provided in this agreement, the net profits of the Property shall be divided and distributed to the parties on a pro rata basis in accordance with their respective Interests. All losses and liabilities occurring in the course of the business shall be borne and paid by the parties in the same proportion.
10. EVENTS OF DEFAULT.
Each of the following will be considered an "Event of Default" under this agreement:
11. DEFAULTS AND REMEDIES.
12. RESTRICTIONS ON PARTIES.
13. LEASE AGREEMENTS.
Any leases on the Property shall be made at a fair market rental price. No lease may provide for rent based on the income of or profits derived from the Property or the lessee.
14. DEATH OF A PARTY.
On the death of a party, his or her personal representative shall make all payments under, fulfill all obligations in, and be bound by all of the provisions of this agreement.
15. SPECIFIC PERFORMANCE.
The parties may suffer irreparable damage if this agreement is not enforced specifically according to its terms. All of the terms of this agreement shall be enforceable in a court having equity jurisdiction by a decree of specific performance, by injunction, or by both a decree of specific performance and injunction.
16. GOVERNING LAW.
17. AMENDMENTS.
No amendment to this agreement will be effective unless it is in writing and signed by a party.
18. ASSIGNMENT AND DELEGATION.
19. COUNTERPARTS; ELECTRONIC SIGNATURES.
20. SEVERABILITY.
If any one or more of the provisions contained in this agreement is, for any reason, held to be invalid, illegal, or unenforceable in any respect, that invalidity, illegality, or unenforceability will not affect any other provisions of this agreement, but this agreement will be construed as if those invalid, illegal, or unenforceable provisions had never been contained in it, unless the deletion of those provisions would result in such a material change so as to cause completion of the transactions contemplated by this agreement to be unreasonable.
21. NOTICES.
22. WAIVER.
No waiver of a breach, failure of any condition, or any right or remedy contained in or granted by the provisions of this agreement will be effective unless it is in writing and signed by the parties waiving the breach, failure, right, or remedy. No waiver of any breach, failure, right, or remedy will be deemed a waiver of any other breach, failure, right, or remedy, whether or not similar, and no waiver will constitute a continuing waiver, unless the writing so specifies.
23. ENTIRE AGREEMENT.
This agreement constitutes the final agreement of the parties. It is the complete and exclusive expression of the parties' agreement about the subject matter of this agreement. All prior and contemporaneous communications, negotiations, and agreements between the parties relating to the subject matter of this agreement are expressly merged into and superseded by this agreement. The provisions of this agreement may not be explained, supplemented, or qualified by evidence of trade usage or a prior course of dealings. No party was induced to enter this agreement by, and no party is relying on, any statement, representation, warranty, or agreement of any other party except those set forth expressly in this agreement. Except as set forth expressly in this agreement, there are no conditions precedent to this agreement's effectiveness.
24. HEADINGS.
The descriptive headings of the sections and subsections of this agreement are for convenience only, and do not affect this agreement's construction or interpretation.
25. EFFECTIVENESS.
This agreement will become effective when all parties have signed it. The date this agreement is signed by the last party to sign it (as indicated by the date associated with that party's signature) will be deemed the date of this agreement.
26. NECESSARY ACTS; FURTHER ASSURANCES.
Each party shall use all reasonable efforts to take, or cause to be taken, all actions necessary or desirable to consummate and make effective the transactions this agreement contemplates or to evidence or carry out the intent and purposes of this agreement.
[SIGNATURE PAGE FOLLOWS]
Each party is signing this agreement on the date stated opposite that party's signature.
Date:______________________________ | By:____________________________________________________________ | |
Name: |
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Date:______________________________ | By:____________________________________________________________ | |
Name: |
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[PAGE BREAK HERE]
EXHIBIT A
DESCRIPTION OF PROPERTY
[PAGE BREAK HERE]
EXHIBIT B
PERCENTAGE INTERESTS
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Name | Percentage Interest | Initial Capital Contribution |
How-to guides, articles, and any other content appearing on this page are for informational purposes only, do not constitute legal advice, and are no substitute for the advice of an attorney.
A land co-ownership agreement is a contract between two or more people to own a piece of property together.
This legal document sets forth,
An accurately written agreement will safeguard the owners’ relationships and avoid disputes due to one party’s intent to own the entire property. The protection offered by a contract can help reduce the chances of expensive disputes or litigation.
If you wish to own land collectively with one or more individuals, use a land co-ownership agreement. A properly drafted and executed contract can encourage a successful relationship between co-owners and lay the foundation for a profitable venture.
There are two most common types of land co-ownership:
There is no limit to the number of people who can co-own a piece of land. However, if you’re buying the property for investment purposes (e.g., as a rental property), certain tax implications may require limiting the number of co-owners. Talk to an accountant or other tax professional if you have concerns.
Co-owners of a property shouldn’t function as business partners, shareholders, or business members. If your property is being used for purposes beyond a simple tenancy, you and the other owners may be subject to additional tax obligations.
If you hire someone to maintain your property, consider signing a “power of attorney” in their name. This will allow the manager to conduct day-to-day business on your behalf without obtaining individual permission each time.
Perform a title search on any property you’re preparing to buy. Information about previous owners and existing liens is usually recorded with county offices.
Record your document in the county where the property is located. This is extremely important as ownership interests aren’t fully protected until the document is recorded. The name of the county office involved with recording real estate instruments varies from state to state. It may be called the County recorder’s office, Land registry office, Registrar of titles, or Register of deeds.
Both parties should review the completed agreement carefully to ensure all relevant points are included. This will ensure that both parties know their responsibilities in the document. Even if certain terms are agreed upon verbally, include them explicitly in the document.
Each co-owner must save a signed copy of the agreement. Have your document notarized to limit the challenges to the validity of a party’s signature.
Contact a real estate attorney to help you draft the agreement according to your needs.
The following instructions will help you understand the terms of your agreement. Please review the entire document before starting your step-by-step process.
This section identifies the document as a land co-ownership agreement. Add the effective date and the name of all the parties (co-owners) involved. All the co-owners involved in the agreement are collectively called “parties.”
The “whereas” clauses, or recitals, define the agreement and provide background information about the parties. In this agreement, the recitals include a statement of the parties’ intent to enter into a co-ownership agreement to co-own the property.
Describe the property’s street address, city, county, state, and legal description. If this property is or has been in escrow, add the name of the escrow agent.
This section states the ownership structure between the parties. The parties can consider themselves joint tenants in common, and each receives title as co-tenants. Each party can use, enjoy, and control the property according to the agreement.
Since this is joint ownership, enter each party’s name and the ownership percentage each will receive. This division may be equal or unequal.
This section mentions that the agreement will continue indefinitely until an undeniable scenario occurs, such as
Given the many restrictions the Internal Revenue System (IRS) places on partnerships in which multiple parties own land together, it is essential to emphasize that your agreement is among separate individuals.
This section confirms that the parties are just co-owners of the same property and aren’t involved as partners. Therefore, they aren't subject to additional property tax payments as required by the IRS.
This section explains how the major property-related decisions will be made, such as:
In this clause, state how the parties will share all earnings (like rental income) or pay any obligations related to the property in proportion to their interest.
For example, if one owner holds 30% of the property, they’ll be expected to pay 30% of the debts and receive 30% of the profits.
This section outlines actions that may cause termination of the agreement by the other parties. Some examples are:
This section states the consequences if a “default” happens. Some of the possibilities are:
This section mentions the conditions each party must follow before selling their property, such as:
This section restricts the number of co-buyers who can co-own the property. It also mentions each party’s rights to sell, transfer, mortgage, or dispose of their interests after providing the other parties the option to purchase.
It also mentions whether the parties are allowed to run or conduct any other business on the property.
This section mentions how the property leases and rent payments must be fixed for the tenant.
This section discusses the consequences of a party’s death, including who’ll continue making payments and receiving profits. It also states that according to “tenancy in common,” the death of one party doesn’t mean that the other owners get their interest—instead, the interest passes according to the deceased party’s will or other governing document.
In certain agreements, more than simply paying money to one party is required if the other party fails to fulfill its obligations. In such cases, a mere payment can’t resolve the situation. This section of the agreement specifies that the terms of the agreement must be strictly adhered to.
If a party fails to comply with the terms, the remedy is "specific performance." This means that the party would be required to follow the terms of the agreement either by the other parties involved or by a court ruling, if necessary.
This section indicates that any changes to the document are only effective if they’re in writing and signed by all parties co-owning the property.
This section explains that even if one party allows the other to ignore or break an obligation under the agreement, it doesn’t mean that the party waives any future rights to require the other to fulfill those (or any other) obligations.
For example, say one party is late making payments, but the other party doesn’t require any interest on those late payments. Later on, the non-defaulting party could tell the other party that it wants to collect interest, as provided in the agreement. If a party defaults and claims that a right was waived just because it wasn't enforced previously, the other party can still enforce it later.
This section states that the parties' rights and obligations will be passed on to heirs or, in the case of companies, successor organizations, or organizations to which rights and obligations have been permissibly assigned.
This section lists the mailing addresses of each party to which all official or legal correspondence should be delivered.
This clause allows the parties to choose the applicable law that’ll be used to interpret the document.
This section mentions that even if the co-owners sign the agreement in different locations or use electronic devices to transmit signatures, all the separate pieces will be considered part of the same agreement. This provision ensures the validity of the agreement as a whole.
This clause protects the terms of the agreement as a whole, even if one part is later invalidated. For example, if a state law is passed prohibiting IRS disclaimer clauses, it won’t invalidate the entire agreement. Instead, only the section dealing with IRS tax matters would be invalidated, leaving the remainder of the agreement enforceable.
In this section, the parties acknowledge that the document they’re signing is “the agreement.”
This section explains that the headings in this document are for organization purposes only and shouldn’t be used to interpret the agreement.
Whether you're buying to build or want to keep your land pristine, if you share it with others, put an agreement in place. A land co-ownership agreement details each party's rights to use the land, what taxes and upkeep they're responsible for, duties, and more.
Here's the information you'll need handy to complete your land co-ownership agreement: