Real estate is attracting more and more new investors. With property prices constantly on the rise, many are choosing to team up with a friend, family member, or spouse to make their first purchase. At first glance, the idea seems like a winner: you split the costs, share the tasks, and multiply your resources.
But behind this enthusiasm often lies an overlooked yet essential detail: the absence of a legal agreement between the partners.
The trap of trust
When a project is built on trust and friendship, it’s easy to believe that everything will be fine. You know each other, you share the same values, so why complicate things with legal documents?
Because in real estate, trust alone is not enough.
Personal relationships and business don’t always mix well, especially when money, management, or the unexpected come into play. A simple misunderstanding can quickly turn into a conflict… and sometimes even break a friendship.
This is where the undivided co-ownership agreement, also known as a real estate agreement, comes in. Although not mandatory, this document acts as a clear and fair partnership contract. It protects everyone’s interests and avoids many headaches in the long run.
Key topics to discuss before signing
1. Division of roles
Investing equally does not mean that everyone contributes in the same way.
One person may take care of rental management, another may handle renovations or accounting. It is therefore important to clearly define who does what, how much time it takes, and how this involvement will be recognized.
2. Use of the property
When it comes to a cottage or income property, personal use must also be taken into account.
How many weeks per year can each owner enjoy it? How are occupancy periods decided? And if one of the investors wants to live there full-time, how does that affect the others? These details must be set out in black and white to avoid any ambiguity.
3. Decision-making
There are many decisions to be made in real estate: renovations, financing, maintenance, rentals, etc.
Is everyone’s agreement required to take action? Can decisions be made by majority vote?
A well-drafted agreement specifies the rules of governance and provides for a conflict resolution mechanism to avoid deadlocks.
4. Financial contributions
Life is unpredictable: job loss, illness, changing priorities…
If one of the partners can no longer contribute financially, what happens? Can they compensate by giving their time?
The agreement should also cover future expenses (renovations, taxes, unforeseen events) to avoid any confusion.
5. Exit terms
No project lasts forever. Some will want to sell sooner, others will not.
It is therefore essential to define the exit rules from the outset: right of first refusal, method of evaluating shares, conditions of sale to a third party, etc.
These clauses prevent tensions and ensure a smooth transition.
6. Mortgage and joint debts
In the event of financing, each co-owner is liable for the debt.
If one co-owner stops paying their share, the others must cover the difference.
The agreement must therefore specify the consequences of default and the repayment plan to be followed to avoid financial imbalances.
7. Death, separation, or illness
This is a sensitive but necessary topic.
What happens if one of the investors dies or becomes disabled? Who buys their shares? At what price?
These situations can be planned for in advance, in particular through life or disability insurance linked to the project, to protect both the partners and the heirs.
Real estate agreement or shareholder agreement: what is the difference?
Real estate agreement (joint ownership): used when partners invest on a personal basis.
Shareholder agreement: necessary if the investment is made through an incorporated company.
In both cases, the objective remains the same: to prevent conflicts, define the rules of the game, and ensure the project’s sustainability.
In summary
Investing in real estate with others is a great opportunity to become a homeowner more quickly and share the risks. But it is also an adventure that requires rigor, transparency, and foresight.
A real estate agreement is not a sign of mistrust, but rather a relational and financial safeguard.
It allows you to set the record straight before emotions or unforeseen events get in the way.
Before concluding a transaction, take the time to consult a notary or legal advisor.
A few hours of reflection today can save you months of stress tomorrow.
