Texas and Tenancy in Common

[moorethemerrier]

We officially have 4 families on our wagons west! Three of us are going to buy and the other would like to rent from us.

We're looking at a parcel with 60 acres, two pre-existing homes and plenty of road frontage for two additional homes. Our long-term goal is a sustainable farm.

The property costs close to $275K, and no one of us would pay that alone, but split three ways we'd jump on it.

Aside from legalities and contracts, our question is do we look at a fractional financing or pool our resources for one loan? We've got one veteran that receives benefits also a 1st time home buyer, one veteran not a first time home buyer, one family neither veterans or 1st time home buyers and one family renting.

Advice?

[katheh]

I would create a company to buy and hold the property (whatever business model is best for TX, LLC, LP, etc) in a fee-simple estate (if those are legal in TX). If the parcel is being sold as one property you will need either one party to carry the financing or a company/estate to carry it, with all parties being partners in common.

You will need to set up something legally to insure all parties are treated fairly throughout the ownership of the land and the loan. This isn't something that can be managed casually over the fence.

Fee-simple in general just lays out the history of the purchase, the % owned by each party, what happens with survivorship, what happens if someone wants to leave (they will need to be bought out, and what if it is the person holding the loan?), and how the property will be maintained, as well as who will pay what bills and when, and what restrictions (if any) will be made on use of the property.

If you don't have a common estate holding the property, the owner of record (usually the person with the loan) can theoretically just boot everyone else off, via eviction or a number of other tenant actions.

I would talk to a good estate / property attorney. This sounds too casual.