Christopher S. Mulvaney,

Attorney and Counselor-at-Law

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THIS WEBSITE INCLUDES GENERAL INFORMATION & THE OPINIONS OF CHRISTOPHER S. MULVANEY. IT IS INTENDED TO STIMULATE A BASIS FOR QUESTIONS RELATED TO YOUR PARTICULAR FACTUAL CIRCUMSTANCES — BEFORE YOU ACT.  THIS WEBSITE DOES NOT CONSTITUTE LEGAL ADVICE. IF YOU WANT LEGAL ADVICE, PLEASE MAKE A ZOOM APPOINTMENT TO SPEAK WITH ME.

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Gonzaga University School of Law – Spokane, Washington – Class of 2002 – Cum Laude The Latin phrase “Deo patriae, scientiis, artibus” translates to “For God and country through sciences and arts”.  The initials A.M.D.G. on the seal of Gonzaga Law School stand for Ad Majorem Dei Gloriam, which is Latin for “For the Greater Glory of God” the Motto of the Society of Jesus (Jesuits): a Catholic religious order founded by St. Ignatius of Loyola.

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WHAT ARE THE RISKS OF HAVING MULTIPLE OWNERS OF REAL ESTATE?

Having multiple owners of real estate, also known as co-ownership or joint ownership, can present various challenges and risks, even though it may also offer advantages like shared financial responsibility

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Here are some key risks to consider:

1. Potential for Disputes and Conflicts:

• Decision-Making: Disagreements can arise over decisions about property management, such as maintenance, repairs, renovations, renting, or selling the property.
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• Financial Contributions: Unequal contributions to expenses like mortgage payments, property taxes, insurance, or maintenance can lead to resentment and conflict.
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• Property Usage: Conflicts may occur over how the property is used, especially if there are differing opinions about personal use versus renting it out for income.
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• Personal Conflicts: Existing personal issues, particularly in family-owned properties, can be exacerbated by co-ownership arrangements. 

2. Financial Liabilities:

• Shared Responsibility for Debts: If one co-owner defaults on the mortgage or other financial obligations, the other co-owners are still responsible for covering the costs.
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• Creditor Claims: Jointly held assets can be at risk if one co-owner faces legal or financial trouble, such as bankruptcy or divorce. Creditors may place liens on the property or force a sale to collect on debts.
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• Credit Score Impact: If one co-owner fails to make payments, it can negatively affect the credit scores of all co-owners. 

3. Loss of Control and Flexibility:

• Joint Decision-Making: Generally, all co-owners must agree on major decisions related to the property, such as selling or refinancing.
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• Selling or Exiting: Selling the property or an individual’s share can be complicated, especially if not all parties agree on when or how to sell.
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• Limitations on Individual Actions: In some co-ownership structures, you may not be able to sell or transfer your share without the consent of the other owners. 

4. Tax Implications:

• Gift Tax Issues: Adding a co-owner, especially someone who is not a spouse, may be considered a gift and trigger gift tax implications.
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• Capital Gains Tax: When the property is sold, both owners may be responsible for paying capital gains taxes on the profits.
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• Loss of Tax Advantages: In some cases, like owning property through an LLC, you may lose tax deductions like mortgage interest and property tax payments. 

5. Complications with Estate Planning:

• Unintended Heirs: Joint ownership can complicate estate planning, especially in blended families. The surviving owner may inherit the property regardless of the deceased owner’s will or trust.
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• Inheritance Issues: If property is co-owned, it can lead to disputes among heirs and potentially accidental disinheritance of family members. 

6. Other Risks:

• Incapacitation: If a co-owner becomes incapacitated, it can be difficult to manage the property, especially without a power of attorney in place.
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• Medicaid Eligibility: Joint ownership can affect an individual’s eligibility for Medicaid benefits. 

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