When to use:
For use where two or more people (or sets of people, for example, couples) share ownership and use of a house, flat or other property for permanent occupation. The agreement provides for occupation terms where all the owners occupy the property at the same time and the property’s occupation is shared by area. This agreement is suitable in many situations, for example, each owner might have the exclusive right to use a bedroom and share the use of all other rooms, or each might own some of a virtual flat where each has the exclusive right to use a bedroom, living room, kitchen and bathroom and the only shared area is the entrance hall.
Before you jump in, you should decide what the most suitable structure for your sharing proposal is. If you are looking at more than ten people, it is logical to hold the property in a limited company and buy and sell shares in it. Ownership of the property itself never changes. No stamp duty is paid once it is bought.
However, running a company does cost money. If there are between 2 and 10 owners it is simply a choice as to whether you want the formality, expense and greater certainty of a company structure and shareholders agreement or the lower cost and comparative informality of an agreement like this.
Net Lawman provides two versions of this agreement. The first is for a situation where only two parties share for example two individuals or two families. The other is designed for more than two parties.
A note on ownership in the eyes of the law:
In New Zealand law, the registration of ownership does not record the shares in which land (that is, property) is held. So if you own 60% and I own 40% we have to record that in some other document. If we do not do so, “the Law” will assume we own in the shares in which we contributed to the purchase price. This may or may not be the same thing. These Net Lawman agreements specifically records the proportion of each of our shares. They also record shares which may be owned by someone who is not a registered owner. This is called a beneficial interest.
NZ-PR542 includes provision for:
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Terms of beneficial interest - beneficial trusts provision;
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Price and payment for the Property;
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How the parties will use the Property;
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Payment of expenses – how, where, what
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Who and how will manage payment of expenses
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Undertakings by the parties
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Alternative exit strategies
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Effect of termination
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What if someone wants to sell his share or sell the property
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Many other “legal” provisions
NZ-PR541 includes similar provision, but allows for differences on account of the interaction of only two parties.
