Drafting an Agreement between Co-owners

Discussion in 'Legal Issues' started by David_SYD, 5th Apr, 2020.

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  1. JDM

    JDM Well-Known Member

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    It would rarely be less than $2,000 to $3,000 for an agreement of this nature in my experience. There is a lot of detail that needs to go into who does what during the project and then the exit strategies (including breaches).
     
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  2. Paul@PAS

    Paul@PAS Tax, Accounting + SMSF + All things Property Tax Business Plus Member

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    Yeah will agree on cost - I have read this thread and ask - What happens if one loses their income ? And the other must carry the burden ? And how does legal liability work if default lands on the working persons shoulders and a sale is enforced for example ? Agreement says one thing and circumstance says another. Agreements only really work when the parties are able to allow it to work.

    This pandemic makes this relevant. Loads of people are facing realities that were never contemplated
     
  3. David_SYD

    David_SYD Well-Known Member

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    One of the clauses deals with the Other Party not being able to fulfil their financial obligations, which includes mortgage repayments. The Other Party would reserve the right to buy the other person out for an agreed amount and a mechanism is drafted setting out the terms of the transfer of shares.

    If the Other Party cannot afford to buy out the Other, a Sale may be forced.

    Again - this is all risk/ reward.
     
  4. Paul@PAS

    Paul@PAS Tax, Accounting + SMSF + All things Property Tax Business Plus Member

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    So you sue the one with no income to enforce. Sounds terrific.

    An agreement is as good as a Westfield retail lease.
     
  5. larrylarry

    larrylarry Well-Known Member

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    S66G and it should be the last resort. Trustees fees are not cheap plus respective legal costs usually come out before net proceeds distributed to the parties to the proceedings.
     
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  6. larrylarry

    larrylarry Well-Known Member

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    You’d be surprised. Some are prepared for collateral damage because it got personal. Not uncommon.
     
  7. larrylarry

    larrylarry Well-Known Member

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    When trustees are appointed usually there are 2 natural persons involved so costs add up. And it also takes time for trustees to reconcile accounts and working with each owner/beneficiary. Time consuming and there could also be other issues that arise which mans trustees have to return to court which means more costs.

    For JV please have a detailed agreement. Specific performance can be sought in court if breached. Expensive exercise again.
     
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  8. larrylarry

    larrylarry Well-Known Member

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    Correct. Parties have to consider how disputes are to be resolved..what triggers the sale etc. a lot of back and forth.