Is Buying a Property with Friends or Family a Safe Move?
The unexpected fall in the rates of property amidst COVID-19 has surely opened up an array of opportunities for people looking to move into a better living space. It’s also the right time for investors to put their finances into good use. However, as the novel coronavirus has impacted the business sector severely, the purchasing power of everyone has suffered. A lot of people have lost their jobs or suffered from salary cuts. As a result, they have no other option but to rely on their savings to make both ends meet. Particularly in the UAE where the living cost is high, it’s tough to manage with salary reduction.Having said this, the opportunities available in the real estate sector are certainly not to be missed. Those who had been long looking for a property to buy in the UAE,this is the ideal time due to the fact that rates have reduced and sellers are more willing than ever to negotiate the terms. Authorities in the UAE have also offered some incentives to people who are buying properties. All these factors combined have made the real estate conditions quite favorable for the buyers and investors in the country.One way to secure a deal for an apartment for sale in Dubai is to buy it along with one of your family members or friends. In simple words, you can share the financial burden with a trustworthy person and buy the property. This surely offers numerous benefits such as reduced cost, less stress, and easy arrangement of finances. However, there are some risks associated with this method as well. Real estate experts also believe buying a property in this can prove to be a wise idea to enter the property market but they have warned about the risks it poses as well. Some of these risks are:
Disputes Among Co-Owners
Firstly, the biggest risk here is that it can cause a feud among you and the co-owner. Consequently, not only will you have to sell the property to settle the dispute but the relation you had with the co-owner will also be jeopardized. These disputes can arise due to numerous reasons. To mitigate their risk, it is always recommended to document each and every aspect. Properly record all the expenses that have been incurred when buying the property. Also, the ratio of the share should be properly documented.
Difficulty in Selling the Property
As discussed above, the property may need to be sold due to disputes. However, this process also has its own set of challenges & complexities. In case of a dispute, if either of the property refuses to sell the property or doesn’t agree on the proposed terms, it can result in even more complexities. To ensure it doesn’t happen, the owners can set terms and conditions for selling the property when planning to buy it. It will be even better if the contract has those terms and conditions in the form of clauses.
Liability in Case of Mortgage Default
It may happen that one of the co-owners becomes a defaulter on the mortgage. Thus, both partners need to be aware of their liability in such a situation. Remember the fact that the bank mortgages the amount for the whole property. It doesn’t take into consideration the ownership rights. Therefore, if one party doesn’t repay the mortgage installment due to any reason, the bank may foreclose the loan and sell the property. You may need to take the assistance of a financial advisor to get guidance if such a scenario occurs. To alleviate the chances of facing such issues, both the parties involved need to know and understand their own and the other party’s ownership rights. Furthermore, they should also take into consideration the non-legal risks involved. This is a huge decision; thus, shouldn’t be rushed. If you are planning to buy a property with friend with a friend or family member, even if it is your spouse, it is important to consider even the smallest of details to ensure no complexity arises if you decide to part ways later on.
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