Gradual Co-Ownership with significant other making property improvements?

[PiaffePonyTx]

I plan on consulting an attorney and having legal documents drawn up but want to do my research first.

I'm 33, divorced and just barely managed to keep the farm. It's where I lived for 20 years (bought the property from my parents) and it's been my sole source of income for over 10. I have 300k in equity in my property as well as other tangible farm assets.

My boyfriend and I have been friends for 14 years, and in a serious relationship for 2 years. He has a good job, owns a home in town with 90k equity. He's never been married and doesn't have children.

We want to live together and spend our lives together. We don't care about marriage but aren't opposed to it either if needed. We both have a realistic mindset and want to be fair. We plan on keeping our finances as separate as possible and contributing equally to household expenses. However, we both have goals and hobbies and we both would benefit by teaming up to build a shop. The rub is in order to do that, he would have to sell his house because I don't have the funds to do so. It's really important to him to have a suitable place to work on his cars, and I would love to have a place to work on my own farm equipment.

I'm willing to risk some, but not all because that's my only way to support myself and I'd like to leave something for my son if/when I die and he totally understands. It also isn't a smart financial move to sell an appreciating asset to pay for one you don't technically own.

We've been trying to research solutions that can reasonably guarantee that I keep my farm and still protect his interests fairly. I came across the concept of gradual co-ownership.

Has anyone done something similar when the non-owner has made property improvements? Of course I would have to buy him out of the shop if the relationship ended sooner rather than later but how do you account for occupancy, appreciation,

 

[PayrollHRGuy]

Just for clarification are you in Texas? If not what state?

 

[army judge]

Of course I would have to buy him out of the shop if the relationship ended sooner rather than later but how do you account for occupancy, appreciation, depreciation?

People can't protect or shelter their assets even when they marry.

If you and he are seeking to keep your assets separate, you could simply form a business.

In the end, that is fraught with potential financial difficulties, too.

It might just be best to NEVER move into one home, or ever establish a mutual residence.

He can keep his home, you can keep yours.

If you wish to go into business together, that should be as far as you take it.

Bottom line, the only way to keep your stuff separate is NOT become emotionally involved.

One doesn't need a lawyer to see what havoc and confusion is reaped when emotions enter their lives.

 

[zddoodah]

I'd like to leave something for my son if/when I die

If? You think death is a matter of "if"?

It also isn't a smart financial move to sell an appreciating asset to pay for one you don't technically own.

What does "don't technically own" mean? You wrote that you want "to build a shop." You didn't say where you intend to build it, but you seem to be implying that you would build it on your property (since you said your BF is going to sell his home, which I assume means the two of you would be living on your farm property). If that's correct, why do you think you wouldn't own the shop (or "technically own" it, whatever that means)?

We've been trying to research solutions that can reasonably guarantee that I keep my farm and still protect his interests fairly.

What would make you think there would be any circumstance under which you wouldn't keep your farm?

Has anyone done something similar when the non-owner has made property improvements?

Happens all the time.

Of course I would have to buy him out of the shop if the relationship ended sooner rather than later

Why do you think this, and why do you think it matters when the relationship ends?

but how do you account for occupancy, appreciation, depreciation?

I'm not sure what your concern here is, but it seems that you are operating under some misconceptions. Answering the questions I've asked will clear up things for me so that I can provide you with additional information.

 

[adjusterjack]

We've been trying to research solutions that can reasonably guarantee that I keep my farm and still protect his interests fairly. I came across the concept of gradual co-ownership.

What you are planning is easy in it's execution. You need to put him on the deed where you have title as tenants in common. Assuming he realizes about $75000 from the sale of his property, that's about 25% of your equity so you specify that his ownership interest is 25%.

Like I said, doing it is easy, but it's a recipe for disaster, as many have found out who have written here.

What happens when you inevitably break up and he has $75,000 invested in your property and wants it back? Will you be prepared to pay it or will he go to court to force the sale of the property. People are not kind to each other after a break up. And don't say it'll never happen because you love and trust each other. Everybody who has ever had a deal like that blow up in their faces said that when they were warned not to do it.

 

[zddoodah]

Please don't respond within the quote boxes. It makes it very difficult to figure out what's new and what's part of the quote. I suggest that you retain the services of a local attorney to put together an agreement that protects your interest. Your boyfriend should retain a separate attorney to advise him in order to ensure that his interests are also protected.

Also giving your BF an interest in your property would likely be the absolute worst idea.

 

[PayrollHRGuy]

Has anyone done something similar when the non-owner has made property improvements?

I owned a hanger at our local airport. I owned the building (the hanger) but not the lot/land that it was on. I leased the land under an annual lease. Had I desired I could have moved the building at any point. In fact, my lot neighbor did just that and rebuilt the hanger on his farm when he sold his plane.

The point being, you could lease the land to him for a building he owns.

 

[PiaffePonyTx]

I owned a hanger at our local airport. I owned the building (the hanger) but not the lot/land that it was on. I leased the land under an annual lease. Had I desired I could have moved the building at any point. In fact, my lot neighbor did just that and rebuilt the hanger on his farm when he sold his plane.

The point being, you could lease the land to him for a building he owns.

Curious, how big of a lot did you lease? Did you sell your building to the land owner?


Sent from my iPhone using Tapatalk

 

[PayrollHRGuy]

Curious, how big of a lot did you lease? Did you sell your building to the land owner?

I don't remember the size of the lot. It was big enough for a 50'x50' metal building and a ~30 foot ramp in front.

I did sell the hanger to the airport authority but my lease would have allowed me to sell it to anyone that had a legal use for it. (had a plane to store).