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News: Co-buyers warned: Stick to rules

Fri, 27 Apr 07

As co-buying with strangers becomes more popular, buyers are being advised to stick to the rules to ensure success...

For potential buyers who have successfully found someone to buy a home with the dream of owning a property could soon be a reality. However, it is essential that they are aware of all the legal implications before entering into the house buying process, advises SmartNewHomes.com.

As a result, SmartNewHomes.com has identified some key considerations for co-buyers:

Initial Considerations

When thinking about buying a property with someone else, whether to live in or as an investment, it is important to be very upfront with the person you are planning to buy with, discuss in detail what you are looking to gain from the shared-buying relationship, how long you are looking to own the property for, what your plans are for the future etc.

Commencing the search

When commencing the search for your home with your shared-buyers, it is essential that you all agree how any initial costs will be split - legal fees, mortgage arrangement fees, survey costs etc. By agreeing this from the offset and ensuring all parties have the relevant funds available it will reduce stress and any wasted time further down the line.

Declaration of trust

When purchasing a property with other individuals you need a Declaration of Trust (also known as a Deed of Trust) - a document that is created between buyers and signed at the exchange of contracts. It sets out legal rights over the property (what percentage of its value you each own), how the major costs of ownership are to be split and how the relationship between buyers will end.

David Bexon, Managing Director, SmartNewHomes.com concludes:

“Buying with a stranger is proving an increasingly popular way for young buyers and would-be investors to get onto the property ladder or extend their existing portfolio. While for some it may still seem a relatively unconventional way of buying a property, for those who are struggling to find sufficient funds alone this offers a great solution.

“In fact, there are a number of advantages of buying with a stranger. Unlike when buying with existing friends, when purchasing a property with a stranger a lot more information is agreed upfront - everyone tends to be much clearer about the long term plans and aspirations of all involved and terms are set out from the offset. When proper legal advice is sought and followed then co-buying can be very successful for all involved”.

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