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Equity Sharing Agreements - Avant Law

Equity Sharing Agreements

October 30th, 2015 by

Consider looking into an equity sharing arrangement when two are more parties are looking to purchase a property. Typically this will involve one or more investors who contribute some or all of the down payment on a home, and an occupier who pays the monthly expenses, while both parties are able to share in the home’s appreciation.

Depending on your individual situation, this arrangement could offer several benefits to both parties. The investor(s) is able to invest in real estate, with the potential for exponential growth and an underlying security interest in the home, while the occupier is able to purchase a home that he/she would not otherwise be able to afford due to a lack of down payment. Although not limited, this arrangement works well in intra-family purchases, where a parent or other family member wants to help a child purchase a home, without making an initial gift or loan of the down payment. If done properly, the investor-parent can help their child purchase a home they ordinarily would not be able to, while still retaining a return on their initial investment. In addition, this arrangement could offer future estate planning benefits through annual gifting of the parent’s investment in the property.

This is a complex, highly personalized transaction that should be handled by an attorney. If executed properly, an equity sharing agreement can offer benefits to both parties involved. Please contact our office today to set up a free consultation.

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