Types of Land Ownership
(Page 5 of 9)
November/December 1974
By Les Scher
The group must decide how the members want to live on the land. For instance, is the group going to build one communal house and share the rest of all the land without dividing it up? Are the members of the group going to build houses on separate building sites and share the rest of the land communally? Or is the group going to divide up the entire land into proportionate sections for each person with none of the land shared by the group? Regardless of how it is done, be sure that adequate building sites exist for everyone who wants to construct his own house. Every site is not equally inviting so decide who gets what before you take title to the property.
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The Model Owners' Agreement I am including at the end of this chapter is the one my two land partners and I drew up among ourselves at the time we decided to buy land together. It covers the two basic areas required in any co-owner's agreement. First, it details each buyer's ownership rights and obligations, and, second, it states the rules to be observed in relating to the land. We bought as tenants-in-common with each person having an equal one-third interest in the land, and we agreed to make all decisions on the basis of a simple majority. You can use any figure you want for approval of co-owner decisions.
You should have no problem understanding the agreement. Notice how we stated the means by which we would handle potential situations. Each owner is responsible for building his or her own house and the amount of money put into the house will be returned upon the sale of the property. We provide for the possibility that one owner might want to sell his interest and get out of the agreement, in which case the remaining owners have "the right of first refusal." We specify the terms under which the remaining owners can buy the seller's interest, or if they decide not to buy it, that they have the right to approve a new buyer. Because we are interested in preserving the natural environment as much as possible, we have specified in great detail what we can and cannot do on the land.
You can use this agreement as a guide to your specific group needs, whether there are two or twenty of you. You can insert and omit specific clauses depending on your situation. Whatever agreement you make, it must be in writing, dated, and signed by all the owners. It is always advisable to notarize all the signatures. This is a simple and inexpensive process. The agreement should also be drawn up and signed before you buy the land so that you can iron out basic problems in advance. Some group members might come to realize that they do not see eye-to-eye with the other members on major issues and will decide to drop out of the deal before it's too late. I have seen this happen many times. Our agreement is very formal and legal sounding, but yours can be expressed in any manner you choose. Informality or choice of language is irrelevant, as long as you express clearly and thoroughly what each individual's rights, obligations, and expectations will be after the group takes title to the property.
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