Splitting a Second Home With Family or Friends? Get a Lawyer | Kanebridge News
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Splitting a Second Home With Family or Friends? Get a Lawyer

Plan specifying how bills are paid might reduce conflict among co-owners

By VERONICA DAGHER
Tue, Jul 25, 2023 8:22amGrey Clock 4 min

Buying a vacation home with family or friends might seem great on paper. Often, those who do so regret the decision.

Home buyers who split the purchase of a vacation spot with family or friends say they are doing so to cope with high mortgage rates, steep home prices or rising home-repair costs. Others are inheriting vacation property as more of their baby-boomer parents die.

In both cases, homeowners say disputes about house guests, repairs and maintenance threaten to spoil the arrangement. Conflicts over the homes can ruin friendships and split up families, while co-owners sometimes end up in legal battles.

The pandemic-fuelled housing frenzy has made the situation worse, say real-estate lawyers, given the surging price of homes has led to more fights about the use and renting of properties. The typical property in second-home markets such as Naples, Fla., and Myrtle Beach, S.C., sold for about $558,000 in June, according to the latest data from Redfin. The typical U.S. home sold for about $426,000, Redfin said.

In Sevierville, Tenn., Avery Carl’s HVAC unit started to act up.

Carl and the woman with whom she owns the home disagreed on how much to spend to fix it. The options were to pay more than $6,000 to install a new system or a few hundred dollars to periodically replace the problematic part.

“Things were tense for about two weeks,” said Carl.

The women eventually found common ground, invested in a new HVAC unit and remain friends, Carl said.

Lawyers and financial advisers say the key to avoiding dangerous scenarios with family or friends is communication and a plan in writing before potential problems arise. Here are three areas where co-ownership can go awry and advice on how to keep the peace:

Set expectations in writing

Financial planners often advise against sharing the ownership of a vacation home with extended family or friends. Don’t assume that even small conflicts will be breezily resolved, they say.

Will Clauss, a Realtor in Hawley, Pa., has seen joint ownership start off smoothly and then go south when a co-owner’s personal circumstances change.

He recently worked with four siblings who bought a vacation home in Pennsylvania’s Pocono Mountains. They had agreed in writing to share expenses equally and rotate which of their immediate families would stay at the house on the Fourth of July and other big holidays.

But when one sister moved away, she no longer wanted to pay an equal share of the home’s expenses. The family ultimately agreed to excuse her from the property’s utility bills. She would need to keep paying her share of the mortgage as she will benefit if the house appreciates and they eventually sell it.

Clauss advises clients with a shared property to hire a lawyer who can put in writing key points such as how an owner could sell his share, how disputes are resolved and who pays the bills.

“A vacation home is unlikely to be shared long-term without serious disagreements and aggravations,” said Avi Kestenbaum, a partner at Meltzer, Lippe, Goldstein & Breitstone, who has helped several heirs settle disputes after they inherited a vacation property.

For instance, decide whether each owner is expected to have the home cleaned before departing, who gets to use the primary suite bedroom if several owners are there, and whether the home might be used as short-term rental, said Clauss.

Remodelling and repairs headaches

A recent rise in natural disasters has also created more discord about who will pay for improvements, renovations and maintenance on the home, said Michele McCallion, a financial adviser with UBS Financial Services in Greenwich, Conn.

Minimize this conflict by having a plan for how bills will be paid.

For routine operating expenses such as taxes and insurance, Jonathan Lauer, his brother and two cousins each pay about $11,000 a year to help maintain the Point O’Woods beach house they co-own on Fire Island, N.Y. Sharing the financial burden is helpful, especially in light of rising costs, he said.

Deciding on bigger and less-routine expenses is trickier. The family’s formal legal operating agreement for the home requires a unanimous decision on any discretionary spending above $10,000, so all four owners have to be on board with any big project.

This winter, the family completed a much-needed kitchen renovation and put in new front steps that cost about $140,000 in total. While the spending guideline helps keep the peace and put a lid on costs, it sometimes slows down decision making, Lauer said.

“It took seven years for all of us to agree to go through with the project,” he said.

Have an exit plan

If you own a house with others, consider how you will eventually unload your share.

Parents who plan to leave the home to their heirs can help prevent future fights by having a candid dialogue with their children to find out if they even want to keep the vacation home after the parents die, said Kestenbaum, the lawyer with Meltzer, Lippe, Goldstein & Breitstone.

Brent Weiss, a financial planner in St. Petersburg, Fla., works with a man who inherited a vacation home with his three siblings.

After the first year of co-ownership, two siblings wanted to sell and the other two wanted to keep it and rent it out part time. The family ended up in a legal battle.

The property was recently sold and some of the siblings aren’t speaking to each other, Weiss said.

“If clear expectations aren’t set early on, pressure can build and eventually blow the top off the partnership,” said Weiss.



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Tonino Lamborghini recently revealed a new luxury project comprising 241 units in Ras Al Khaimah, developed in partnership with Arista Developments.

Tue, May 21, 2024 2 min

Named the Tonino Lamborghini Residences, this project promises a fresh take on luxury living with its iconic design, cutting-edge amenities, and stunning sea views.

Set on Al Marjan Island, the development is adding 241 high-end units to the area’s real estate offerings, all reflecting the sleek, Italian elegance associated with the Lamborghini name.

These residences are designed to impress, featuring modern architecture that harmonizes with the scenic surroundings and interiors marked by meticulous craftsmanship and top-quality finishes.

Living in this one of the project’s units means access to a range of upscale amenities: a state-of-the-art fitness center, multiple swimming pools, beautifully landscaped gardens, and dedicated areas for children’s play. The complex also offers a business center with a conference room, an outdoor BBQ area, and a chic café, catering to all aspects of high-end living.

Arch. Abdulla Al Abdouli, Chief Executive Officer, Marjan, expressed excitement about the introduction of Tonino Lamborghini Residences to Al Marjan Island, noting the project’s blend of sustainable construction and smart home technologies. This integration, he mentioned, guarantees a luxurious lifestyle equipped with the finest modern amenities, reflecting the exquisite Italian craftsmanship. He is confident that this new venture with Arista Developments will significantly boost the allure of Al Marjan Island as a top lifestyle destination in Ras Al Khaimah for both investors and residents.

Tonino Lamborghini, President of the Tonino Lamborghini brand, said: “We are delighted to be among the pioneers in this remarkable new destination in one of the seven emirates of the UAE. Our heartfelt gratitude and recognition go to H.H. Sheikh Saud bin Saqr Al Qasimi, Supreme Council Member and Ruler of Ras Al Khaimah, for his visionary leadership and foresight, and for embracing innovative strategies to revitalize a region full of potential.”

Mr. Arthur Chu, Chairman of Arista Developments, highlighted the project’s ambition to capture the essence of the Tonino Lamborghini brand in every aspect of its design. He described the development of a prestigious residential tower on Al Marjan Island that will reflect the lifestyle and beauty synonymous with Lamborghini. From the sharp, well-defined lines of the exterior to the elegantly designed interior common areas, every detail is crafted to showcase the brand’s distinctive elegance and sophistication. Chu emphasized that the interior designs, personally crafted by Tonino Lamborghini, aim to fully immerse residents in the Italian brand’s luxurious identity.

The variety in housing options is vast, ranging from one and two-bedroom apartments to duplexes, sea view villas, signature villas, and exclusive penthouses.

The collaboration between Tonino Lamborghini and Arista Developments blends iconic Italian style with expert real estate craftsmanship. This venture marks Lamborghini’s first introduction to Ras Al Khaimah and represents a commitment to setting new standards in luxury and modern living.

 

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