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Help please?

Discussion in 'General Investing Discussion' started by Smells, 26th Nov, 2010.

  1. Smells

    Smells New Member

    Joined:
    26th Nov, 2010
    Posts:
    1
    Location:
    Tasmania
    Hi there, I would love a tiny bit of advice please!!
    I am about to invest in a property with my defacto- a 600 acre cropping farm.
    We are not putting any money upfront but are relying on the equity in his parents large properties. My partner and I will be repaying the loan at 50% each.
    My partner wants to enter into a "tenants in common" agreement at 50% each rather than joint proprieters.
    If we split should I receive 50% of the property? Or because his family supplied equity should he be entitled to more?
    I have 2 children that do not belong to him.
    If I died should my children receive 50% of the property? As it seems he thinks because his family are backing us then they/or he should receive some of my share of the farm and my children should not get 100% of my share.
    Any advice would be much appreciated, as I have not nivested before and obviously do not want to be ripped off.
    Many thanks.
     
  2. Waimate01

    Waimate01 Well-Known Member

    Joined:
    26th May, 2008
    Posts:
    157
    Location:
    Sydney
    I'm sure this isn't what you're hoping to hear, but the whole thing sounds like a quagmire to me, and worth avoiding.

    It sounds like you're firmly responsible for 50% of the debt, but don't get to see 50% of the benefit in the event of a split or death. As I understand it, as long as the paperwork is in place, you'd be legally entitled to your 50% but you'd have to slug it out to get it.

    Further, even if you were able to assert your legal right to your half, actually liquidating it in hostile circumstances could prove very tricky. They might choose not to buy you out, or if you force a sale, they might run the property down to depress the price. People do amazing things.

    To me, it just seems odd that such an arrangement would even be suggested, and doubly-odd that opinions have already been voiced that his family should have some sort of "extra" claim.

    There's a world of difference between what "should" legally happen and what ends up happening, especially for example, if it's your children trying to pursue the claim. That difference is wallpapered with unhappiness and legal fees.

    You could still have a bunch of these issues even as joint tennants, so that's not necessarily a clear solution either (eg, you die and your share goes to him instead of your kids).

    I guess one approach, if you want to go ahead, is to assign a numerical value to his parents support. Presumably the interest rate is no lower due to them. Maybe there's some mortgage insurance saved. Presumably the main difference is you didn't have to save for a deposit - but the value isn't that of a notional deposit because you don't end up paying any less. Their contribution is assuming the risk, which seems to me quite hard to quantify.

    It might be worth your while seeking out a lawyer who specialises in family property disputes and saying "I don't have one now - I want you to tell me how to avoid one". I did that once, and it was a few hundred dollars very well spent. The lawyer also gave me a very good reception for not waiting until it had all turned to custard.

    In any event, good luck with it.