I often have clients who have entered some sort of business arrangement with someone but never got the details in writing. If you do this, you are courting disaster, whether the other person is a family member, a friend, or a stranger (sometimes, the closer the person is to you, the worse the problem can be).
Too often, each person who enters this type of arrangement walks away with a completely different understanding of the agreement. the best protection for everyone is to have a well-written contract that sets out the details. Otherwise, you have nothing to show to a court if you wind up having to enforce the agreement later. I sometimes joke that a verbal contract is "worth the paper it's written on" for this reason.
The cost of having a competent attorney put your agreement in writing is a whole lot less than the cost of losing what you thought you had, so before you shake hands on the deal, see a lawyer.
Do you have a horror story to add or a question? Please feel free to post.
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2 comments:
what about joint property with family? I've had clients ask who pays for utilites, taxes etc on it once a mortgage was paid off if they did it 50-50 before hand but only one of the parties is living in it afterwards. Should they have put this in writing first?
Normally, the deed for multiple-owner real estate will state what proportion each person owns. If it does not, the law usually assumes each person (or each couple) owns an equal share. Ordinarily, each co-owner is responsible for his or her own proportionate share of expenses.
When families buy property together, though, they still should have a written agreement about who has what percentage of ownership, who pays what proportion of expenses, etc.. Particular attention should be paid to what happens if a particular co-owner will occupy the property--should they pay a greater proportion of expenses, or pay rent to the others, etc.?
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