Thinking About Co-ownership with a Friend?

By Ruben Gonzalez Jr
Prudential California Realty (DBA)


Friends often share holidays, vacation together and are there for all the important moments in life. So, why not buy a home together?

An increasing number of consumers are considering joint ownership. Such as transaction makes sense, as it can help those who may not have been able to afford a home on their own, it gives each owner a real estate investment, and it can even strengthen the friendship.

But the opposite could happen as well. Friends can feud over the most trivial of things, placing the long-term housing investment at risk.

Here are some tips for surviving co-ownership with a friend.

1. Be sure before agreeing to this life-altering decision that all parties are willing to disclose their financial information, agree upon the type of home and location they are after, and are truly comfortable with living with one another.

2. Consult with an attorney: A contract between the parties is vital, as is listing each person’s name on the deed and the mortgage papers. The percentage of ownership must be clearly stated in the contract, including details of each person’s share of the down payment and the way in which mortgage payments will be divided. This sets the stage for deciding each one’s share upon sale.

3. Get pre-approved for a mortgage: Mortgage companies aren’t always thrilled with lending to two unmarried or unrelated people. Odds are those buying a home will need to jointly qualify as co-borrowers on a single mortgage in order to purchase a property held in tenancy in common or joint tenancy.

4. Understand each other’s wants and needs: House options, mortgage rates and contract terms will be contingent on each individual’s credit history, financial health and both short-term and long-term obligations, so it is smart to discuss all of this ahead of time. During the house-hunting stage, the friends may have different ideas on what they are looking for. It’s always a smart idea to sit down and list the most important features to each and figure out what each is willing to give up.

5. Have an exit strategy: Jobs change or a surprising romance could evolve where marriage will soon be in the picture. What happens to the house then? This is something that should be agreed upon before the house is bought.

Once everything is agreed to and a mortgage commitment is in hand, things still aren’t easy. It’s hard enough finding the perfect home, but to have to find the perfect home for two is even tougher.

Friendships can stand the test of housing issues, so don’t be scared off; just make sure that when buying any real estate with friends that you don’t let the friendship cloud your judgment.

Ruben Gonzalez can be reached at (562) 507-0754 or E-mail.

Prudential (dba) is an independently owned and operated broker member of BRER Affiliates, Inc. Prudential, the Prudential logo and the Rock symbol are registered service marks of Prudential Financial, Inc. and its related entities, registered in many jurisdictions worldwide. Used under license with no other affiliation with Prudential. Equal Housing Opportunity.