Equity Share Agreement
What is this form?
The Equity Share Agreement is a legal document that outlines a partnership arrangement between two parties investing in residential property. Through this agreement, one party can live in the property while both parties share in the costs, equity, and any profits from a future sale. This arrangement distinguishes itself from traditional mortgage agreements by allowing individuals to buy a home, even if they cannot afford the full mortgage amount, thereby facilitating homeownership for many.
When to use this form
This form is appropriate when two individuals want to collaborate on purchasing a home, especially if one party lacks sufficient funds for a mortgage. It is commonly used in situations where individuals seek to share living expenses and property equity, allowing both parties to benefit from potential financial gains and tax incentives. It is also beneficial for investors interested in residential property who want to create a mutually beneficial arrangement with another party.
Who should use this form
- Individuals looking to invest in residential real estate together.
- Homebuyers who need financial assistance from a partner.
- Real estate investors seeking a mutually beneficial arrangement.
- Property owners wishing to offer equity share options to potential residents.
How to prepare this document
- Identify all parties involved by entering their full names and addresses.
- Specify the property details, including the legal description and address.
- Fill in the purchase price, down payment amounts, and financing details.
- Outline expenses, occupancy terms, and responsibilities for maintenance and utilities.
- Detail the method for distributing proceeds upon sale of the property.
- Ensure both parties sign the agreement and have it notarized if required.
Does this form need to be notarized?
This document requires notarization to meet legal standards. US Legal Forms provides secure online notarization powered by Notarize, allowing you to complete the process through a verified video call, available 24/7.
Mistakes to watch out for
- Failing to clearly define each party's financial contributions and responsibilities.
- Not including specific terms for the occupancy and maintenance of the property.
- Omitting details on how sale proceeds will be distributed after selling the property.
- Neglecting to have the agreement notarized when required by state law.
Why use this form online
- Convenience: Easily download and customize legal documents from home.
- Editability: Modify the agreement as needed without the hassle of physical paperwork.
- Reliability: Access forms drafted by licensed attorneys to ensure compliance and legal validity.
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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.
