Define Terms of Shared Land
A co-tenant agreement is a flexible document that defines the terms of two or more people sharing rights and use of a property. Typically, the agreement lays out the physical and financial responsibilities of each of the involved parties. It is also a useful tool for ensuring that a farm or business remains in the family. The terms of using the land can also be defined, giving residence space to one child with rights to farm to another. The agreement can also determine how new parties can or cannot be added to the arrangement, ensuring that the land remains under the control or use of the desired parties.
When to Use a Co-Tenant Agreement
Once you understand what exactly a co-tenant agreement is, the question remains, how do you get into the situation of needing one? Many families use co-tenant agreements to define the terms of shared property or for passing on land to the next generation. Co-tenant agreements are valuable tools for a family hunting cabin, vacation house, or farm. The agreements can define hunting rights, grant access to the property, determine who has residential rights and who has commercial rights to the property, etc. This can allow children to share rights to the farm, defining the division of labor, the rights to the family home and the sharing of operational costs and profits. Co-tenant agreements also work when property is being passed from an estate to the children or grandchildren of someone who recently passed away. The agreement provides terms for using property that the family inherited, especially when there was not a pre-agreed upon arrangement for how the land would be used and shared.
Additions to the Agreement
Another valuable tool of a co-tenant agreement is preventing an unwanted tenant from joining the agreement. The agreement can specify limitations for adding new parties or require the consent of all parties involved before a new person is added to the agreement. This is achieved by establishing what happens upon a transfer during a person’s lifetime, at his or her death or upon becoming disabled. If the agreement allows for new tenants, the document will provide purchase price and payment terms. Alternatively, it can even prevent anyone from being added to the agreement at all. The agreement is a flexible document, created specifically for your needs and situation, and as such, it can contain whatever provisions your family may need or want.
The ultimate goal of a co-tenant agreement is to keep a shared understanding of how the property will be used and shared amongst the co-tenants. If you are sharing property without such an agreement, there are not as many protective measures to help you against actions by your other co-tenants. This means one of your co-tenants can sell his or her rights and you can end up sharing property with someone whom you never agreed to share. The agreement also saves the other co-tenants from having to go through a messy situation if one of their co-tenants passes away. If you have questions about how a co-tenant agreement can help your family, contact any of our three offices to make an appointment.