How do you manage leases with co-owners?

1 Co-ownership agreement

A co-ownership agreement is an essential legal document that outlines the rights and responsibilities of each co-owner, as well as the terms and conditions of the rental property. It can help prevent disputes and protect your interests in case of any legal issues. This agreement should cover topics such as the ownership structure and percentage of each co-owner, the decision-making process and voting rights of each co-owner, the financial obligations and contributions of each co-owner, the distribution of income and expenses from the rental property, rules and procedures for selling, transferring, or refinancing the property, as well as dispute resolution and exit strategies for each co-owner. To ensure that your agreement suits your specific situation and complies with local laws and regulations, it is important to consult a lawyer to draft it.

2 Tenant screening and rent collection

Managing leases with co-owners requires careful tenant screening and rent collection to ensure that the rent is collected and distributed fairly and transparently. To achieve this, you should agree on rental criteria and standards with your co-owners, such as credit score, income, references, and background checks. Assign one co-owner or hire a property manager to handle the tenant screening and application process. Additionally, use a written lease agreement that outlines the rent amount, due date, late fees, security deposit, and other terms and conditions. Additionally, set up a separate bank account for the rental property and use online payment methods to collect and track rent. Lastly, allocate the rent income and expenses according to the co-ownership agreement and provide regular statements to your co-owners.

3 Maintenance and repairs

The third aspect of managing leases with co-owners is maintenance and repairs, which should be handled with care to keep the property in good condition and comply with health and safety codes. To achieve this, regular inspections and preventive maintenance should be conducted to identify and address potential problems. Additionally, agreements should be made between co-owners regarding the budget and scope of maintenance and repairs, as well as the division of labor and costs. Furthermore, communication with tenants and co-owners about any maintenance and repair requests and updates is essential. Licensed and insured contractors or service providers should be hired to perform the work, while receipts and invoices should be kept for all expenses. These expenses should then be deducted from rental income and reported to co-owners. Although managing leases with co-owners can be tricky, having a co-ownership agreement, a clear tenant screening process, rent collection system, and a smooth maintenance and repair system can help ensure that your rental property runs smoothly and profitably.

4 Here’s what else to consider

This is a space to share examples, stories, or insights that don’t fit into any of the previous sections. What else would you like to add?