Legal Question in Real Estate Law in California

Re: Buying Real Estate with Partners

No matter what you do, you will want to have a written ownership agreement amonth the owning parties. I don't care how much you trust each other. I have seen battles between family members when there was no written agreement.

From a liability standpoint, I would recommend that you form a Limited Liability Company to own the property, with the tree parties owning equal shares. You will be tased as a partnership, but will receive the limited liability of a corporation.

The 14 day rent/use test that you refer to is more for an individual's second home, not a goup ownership like this. You would be able to receive better tax treatment holding it as a business rather than a second vacation home. Each party will pay rent to the LLC when they use it.

Re: Buying Real Estate with Partners

I agree that an LLC is the best way to hold ownership and operate the proposed rental business, and that a written contract between you is essential. Even if the three of you got along perfectly all your lives, your heirs, or some of them, may have differing views. Finally, although a properly set-up and run LLC will shelter the three owners from potential tenant claims, in order to protect your investment you should carry substantial hazard and liability insurance.

Re: Buying Real Estate with Partners

you don't need advice you need common sense that says spend the money now, not later for sure and have a good r/e attorney advise you -- moreover get a written agreement in place and probably form a llc --- that alone is advice worth its weight in gold, and save each of you more gold --- i am in north. ca call me at 925-945-6000 as i have aided numerous individuals in your same position

Re: Buying Real Estate with Partners

I would suggest a Limited Liability Partnership which will permit partnership tax accounting and limited liability of the partners.