There are two fundamental
mechanisms for sharing all assets (except staff):
- Joint ownership by all parties (co-ownership, shared ownership, partial ownership or
fractional ownership)
- One party owns and the other(s) pay for use or occupation through
a licence, lease or hire agreement
There are three routes to fractional ownership
or joint ownership:
- two or more people get together and co-buy the asset
- one person already owns the asset and one or
more people buy a share of the asset
- one person already owns a share in the asset and sells the share.
Depending upon the size, type and value of the
asset and on the number of joint owners, there are several different mechanisms
to enable fractional
ownership or joint ownership:
- Joint ownership by more than one private individuals
- Company ownership, where the sharers are shareholders
in the company
- Partnership ownership, where the sharers are
partners in the partnership
Whichever method you use, the sharers do not
have to own equal shares of an asset.
Similarly there are two routes to a lease or licence agreement:
- two or more people get together and decide to
share an asset. They decide that one person will buy the asset and
fractionally rent it to the others. This can apply to any kind of asset, but can
also be more suitable for certain assets for practical purposes, particularly
if one sharer will be housing/storing the item, or if it is important
that someone is clearly responsible for maintaining the asset.
- one person already owns the asset and one or
more people fractionally rent a share of the asset
The combination of type of asset and type of
sharing agreement leads to five sharing scenarios each requiring different
legal documentation:
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Fractional ownership or joint ownership of property
- If you are buying real property, the actual transfer must be done
through solicitors. That is the law. But the deed of trust and sharing agreement documents you can buy here will deal with all the arrangements between
you.
- The Land Registry only records the first four names in any document
to be registered. So if you want more than four people to own together,
your sharing agreement must also contain trust provisions to safeguard
the property owning rights of the sharers whose names are not registered.
Or you could consider setting up a company or partnership to own the
property.
- Even if all sharers can be listed as owners, it may be best not
to set out the details of your deal in what could be a public document.
Instead, use a sharing agreement. This will include every aspect of
your sharing arrangements. Some of the issues you may wish to include
are explained in these pages:
Part 1 Ownership, exit strategy and costs
Part 2 Use of the asset
Part 3 Fittings, handover and condition reports
Part 4 Meetings and disputes
- If you are living in a property at the same time, either constantly
or occasionally, then you need a owners co-habitation agreement which
regulates the day-to-day use, occupation and running of the property.
Fractional rental of property
Joint ownership of chattels
Fractional rental of chattels
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