Many of you showed interest in this post, and I thought it might make some sense to “flesh out” terms and conditions  a well-drafted Tenancy in Common Agreement or Joint Tenancy Agreement (the “Uncoupling Documents”) might contain. There is nothing magic here: common sense and simplicity should always be the ruling impulses.

Here are some ground rules.

     1. Both parties should have counsel. If people are willing to enter into an agreement like this, they want it to be enforceable somewhere down the road. It is perfectly acceptable for one attorney to take the laboring oar in drafting, with the other attorney serving in a “review” status. That will obviate the ability of a party to say, “I did not understand” or “I signed but I didn’t know what I was getting into.” The cost of a reviewing attorney should be minimal.

     2. There is no need to record this document. At least in Massachusetts, where I practice, recording serves the function of giving notice to the world of a certain set of circumstances affecting a property. It is title driven. The Uncoupling Documents do not affect title. They are simply some understanding the parties have with regard to their ownership. As a point of fact, recording the Uncoupling Documents may complicate title review.

     3.  Basic “Exit Approaches” I have used.

          a. Notice to the other person with an Offer to purchase at a price. The other person has thirty (30) days to accept or say that he or she will buy the offering person’s interest at the price in the first offer. This keeps the offers from the first person honest and fair.

       b. The same Notice as Paragraph 3a, but no price. Each party then selects an appraiser, and the price is the average of the two appraisals. There is a variation of this approach which has the appraisers selected by the parties selecting a third appraiser, and the third appraiser doing the appraisal, and it is binding. This approach has the merit of having the price be accurate. I still like to give the “non-offering” party a chance to buy at whatever price has been determined.

       c. Whoever ends up withdrawing, at whatever price, there is a provision for delayed payment. I usually suggest a down payment of at least 20%, with the balance to be paid over three (3) years at prime plus 2%. There is obviously no magic in this, but some formula should be included to give the other person time to buy out the withdrawing person. A sale of the dwelling would trigger payment in full at that time.

       d. Sell the property and split the proceed. This may be the easiest, and cleanest, solution. Each party should be able to require this. It clears the air, and gives each party the ability to “move on” and not have to deal with the other on any continuing basis. I have found it helpful to make some provision for selecting a firm or person to market the property is another good provision for the Uncoupling Document.

Most people will honor a written agreement that they understand and have signed. The problem in the Uncoupling Scenario is that people have a real problem agreeing on what is “fair”. There is hurt or deception mixed in to their relationship. The ability to have a well-drafted and easily to understand exit strategy can ease the pain for both sides. That is what I have found in my more than forty (40) years of trying to help people protect themselves.