Equity Share Agreement
Definition and meaning
An Equity Share Agreement is a legal document that outlines the terms under which two or more parties agree to share equity in a particular property or investment. This agreement specifies the investment amount, ownership percentages, responsibilities for maintenance, and distribution of profits or losses arising from the property.
Key components of the form
The Equity Share Agreement includes several crucial components:
- Purchase Price: Details the total price of the property and the down payment amounts.
- Investment Amounts: Specifies how much each party has contributed to the investment.
- Loans by Parties: Outlines the terms for any additional funds lent between the parties.
- Occupancy Terms: Clarifies who will reside in the property and their responsibilities for maintenance.
- Distribution of Proceeds: Indicates how proceeds from the sale will be divided among the parties.
Who should use this form
The Equity Share Agreement is ideal for individuals entering into a joint venture for purchasing residential or commercial properties. It is particularly useful for:
- Investors looking to share real estate costs.
- Individuals wishing to co-own property with clear terms.
- Partners or family members wanting a structured legal outline for their investment.
Form popularity
FAQ
A shared equity agreement enables a home buyer or homeowner to share home equity in exchange for a one-time cash payment from an investor. Such agreements allow you to liquidate part of your equity for cash or a down payment. The homeowner doesn't pay off the investor with monthly payments or interest.
A shared equity mortgage is an arrangement under which a lender and a borrower share ownership of a property. The borrower must occupy the property. When the property sells, the allocation of equity goes to each party according to their equity contribution. Each party also shares losses on the sold property.
Equity sharing sounds like a simple form of shared ownership. Investor and occupier each contribute to the down payment, occupier lives in the home, keeps it up, and makes the monthly payments, and the parties share the home appreciation.
Help to Buy is a government backed scheme, and the Help to Buy equity loan enables purchasers to buy a new build home with the help of an equity loan, also known as shared equity.