For the last seven years, Floridian Joe Webster, along with his wife and kids, has shared a Montana bird hunting compound with seven families hailing from all corners of the country. By pooling resources, the group purchased the 4,200-acre property with two houses as well as an income-generating farming operation staffed year-round by local ranchers and a pack of farm dogs.
“We were fortunate,” Webster says. “Income from the farm more or less carries the property, so we don’t have expenses except traveling there or our hunting costs.”
Webster and his friends take turns using the space during the coveted 10-week hunting season, which runs from September to November, and in the months between. They are, more or less, living a bird hunters’ dream – roving their own fields each year in search of grain-plumped partridges, pheasants, grouse, and ducks.
Before buying together, the group thought ahead about the complexities of sharing ownership. Webster and his fellow owners manage their property under an LLC – a limited liability corporation – and, as such, have detailed bylaws dictating how the families share the property. There’s a rotation system for which family gets first pick of high season weeks, for instance, and there are also rules for exiting the partnership.
“You have to make sure you have a way to part with unhappy people,” he notes. “We started out with nine families, and now we’re down to eight.”
As part of their bylaws, any owner can sell their share if it’s marketed at appraised value and offered to the group first, versus sold to a stranger. So when one member grew dissatisfied, the remaining members bought him out.
Sharing in the purchase of a vacation property – whether it’s a major operation like Webster’s, a ski condo in a planned development, or an unheated fishing shack on a Midwestern lake – can allow property owners to spend less than if they went it alone, while also gaining access to more home.
Those considering buying a home together will have dozens of considerations ranging from budgets to ownership shares, from the place’s distance from the owners’ primary homes, to what sorts of activities and amenities are on offer. But many co-owners of vacation property, Webster included, will tell you that joint buyers need to spend the bulk of their pre-purchase efforts studying how to share a property’s title. Laws – being laws – vary from state to state.
Generally shared ownership choices include the following:
Pros: Co-owners can get highly specific and make legally binding rules about how a property will be shared.
Cons: LLCs require annual meetings, recordkeeping, and possibly legal help.
Pros: Owners share equal percentages of the property, and buy and close on it together.
Cons: If an owner dies, his or her stake transfers to remaining owners rather than to an heir.
Tenancy in Common
Pros: Owners can own unequal portions of the property. If an owner dies, his or her ownership stake is transferred to an estate.
Cons: Owners can sell their shares without consulting other owners.
What works depends on the needs and demands of the group. If there is a limited season during which spending time at the property is attractive (because it’s a ski lodge, a northerly cabin, or too inconvenient to reach on weekends), it’s probably best to have some rules going in, especially if your partners haven’t been friends for years. If everyone involved is so close that they feel like family, then it matters less and the property itself matters more. Figuring out the technical details may be hard, but its not as hard as figuring out who sleeps where.