Written by Jodie Masson on January 27, 2017
The smart way to buy your weekender and keep your friends
It’s that time of year when we all take a break from our stressful jobs, and travel to places more peaceful than our own. We start to reassess our priorities and think about spending more time with our families.
Maybe it’s time to buy a weekender? A place to get away from it all regularly. A home away from home.
But the problem with buying a weekender is that it’s a huge expense – not only the initial acquisition of that beachside property, but also the ongoing maintenance costs and rates (which are usually not tax deductable). In addition, the reality is that it’s unlikely, after the initial “honeymoon period”, that you will use it every weekend and every holiday.
The ongoing maintenance (eg cleaning and lawn mowing) can also be a drain on families who are already time poor – do you really want to be spending your week maintaining and cleaning one house and your weekends maintaining and cleaning a weekender?
It might be time to think about co-ownership.
Co-ownership is essentially owning a property with others. In the context of a weekender or holiday house, it’s a very useful structure as it allows people to pool their money to buy and manage an asset that they may not have otherwise been able to afford. It allows several families to share the burden of ongoing rates and charges, maintenance and cleaning. In most structures, it means that the weekender is used more regularly as people visit less often and tend to value their “allocated time”.
A co-ownership structure is analogous in many ways to a strata scheme (in the sense that it involves many owners working together to make decisions about a jointly owned property). However, whilst a strata scheme sits within a comprehensive legislative framework that governs the relationship between co-owners, a co-ownership structure does not. You need to specially contract to establish the “ground rules” as, unlike strata, there is no specific legislation to save you if things go wrong. It is very important to have a comprehensive co-ownership deed which sets out the legal contract between the various co-owners.
We have set up and worked with several co-ownership structures, both for enormous and complicated commercial properties and for smaller “weekender” style assets. Specialised skills are required to set up a functional and peaceful co-ownership scheme. It pays to get it right from the very beginning.
In the context of a weekender, the co-ownership arrangements that we have seen work well all cover the following key areas:
A co-ownership deed needs to be properly constructed to be enforceable by the original owners, and any subsequent co-owner. It needs to have “running covenant” clauses so that it will always apply to the property, even where one or more owners try to avoid its operation. It needs to be a document that an owner is able to rely on if they need to take legal action, in court if necessary, against a co-owner for a failure to comply with the co-ownership deed.
In a well-managed co-ownership scheme, serious disputes rarely happen as the co-ownership deed articulates the pre-arranged agreement between the owners. It operates in practice like a strata scheme – where meetings are held annually, owners follow the pre-agreed rules and the costs associated with owning and maintaining the property are properly budgeted for and properly shared.
Now…. maybe that weekender is not such a bad idea after all?
Partner, Leisha de Aboitiz and Lawyer, Rachael Bass, recently wrote an article published by the REINSW in relation to recent NSW Government reforms on flammable cladding. Read the article here:
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