Tenancy in Common Agreement (Single Dwelling)
This Tenancy in Common Agreement (“Agreement”), effective as of
(“Effective Date”), is among:
1. (full name) having an address at
(address) ;
2. (full name) having an address at
(address) ;
3. (full name) having an address at
(address) ; and
4. (full name) having an address at
(address) .
The above mentioned parties are referred to in this Agreement as the “Owners.”
The Owners acquired the property described on Exhibit A, attached to this Agreement
and incorporated herein by this reference (“Property”). The Owners desire to provide
for the proper and orderly ownership, operation, and management of the Property, and
to designate the Owners' respective ownership interests.
NOW THEREFORE, in consideration of the mutual covenants and agreements
set forth below, the Owners hereby agree as follows:
1. Term . This Agreement shall be effective as of the Effective Date and shall
continue for a period of forty (40) years unless sooner terminated by the consolidation of
the Property’s ownership in a single Owner or upon written agreement of all the
Owners.
2. Ownership.
2.1 Tenants in Common. The Owners shall hold title to the Property as tenants
in common. The Owners intend to utilize the Property as their individual principal
residences.
2.2 Ownership and use of the Property is Governed by this Agreement.
This Agreement establishes and imposes on the Property limitations, easements,
covenants, conditions, and restrictions as equitable servitudes pursuant to a general
plan to provide for the proper and orderly ownership, operation, and management of the
Property and of the Owners' respective ownership interests therein. Such equitable
servitudes shall run with the land and shall be binding upon the Owners and their
successors and assigns, and all parties having or acquiring any right, title, or interest in
the Property. 2.3 Each Owner's fractional undivided interest (each the respective Owner's
“Interest”) in the Property is as follows:
Owner Interest
1. %
2. %
3. %
4. %
Each Owner's Interest shall remain as set forth above regardless of any
improvements or additions made to the Property including an Owner's Private Living
Area (as defined below). The respective Owners are at times referred to as “Owner 1”
through “Owner 4” in the Exhibits to this Agreement.
2.4 Appreciation or Depreciation of the Property . The Owner’s shall share
appreciation or depreciation in the Property in proportion to their Interest.
3. LIVING AREAS
3.1 Private Living Area. Exhibit A shall describe the private living area(s) for
each Owner. Each Owner shall have the exclusive right to use and enjoy their
respective Private Living Areas. An Owner shall not enter the Private Living Area of
another Owner without such Owner's permission except as provided in this Agreement.
3.2 Common Area. Any area not designated as a Private Living Area is the
Common Area. Each Owner may use the Common Area in accordance with the
purpose for which it is intended without hindering the exercise of or encroaching upon
the rights of any other Owners.
3.3 Occupancy Area. For purposes of this Agreement, an Owner's Private
Living Area and their share of the Common Area is their “Occupancy Area.”
4. Selling or Leasing an Owner's Interest
4.1 Right to Sell. Each Owner shall be entitled to sell their interest in the
Property upon compliance with the requirements of this Agreement including the terms
in Section 12 below.
4.2 Right to Lease. Each Owner shall be entitled to lease their Occupancy Area
and to all the income derived from such lease provided all of the non-leasing Owners
shall approve a prospective tenant upon their review of and satisfaction with such
tenant’s standard form rental application, credit report, tax returns, and other information
as the non-leasing Owners may reasonably request from the prospective tenant or
leasing Owner. Such approval shall not be unreasonably withheld. Prior to executing a
lease with such prospective tenant, the leasing Owner shall provide the other Owners
with written notice of the proposed rental or lease and the identity of the proposed
tenant(s). Upon receipt of such notice, the non-leasing Owners shall have no more than
ten (10) days to object in writing to such prospective tenant. If the non-leasing Owners
fail to inform the leasing Owner of their objection to a prospective lessee and the reason
for it in writing within the time provided, they shall be deemed to have consented to the
lease. Any lease must: a) be in writing; b) be for the leasing Owner’s entire Occupancy
Area; c) direct the tenant to make all rent and other payments due the landlord under
such lease directly to the Property Account (as defined below); and d) be made subject
to this Agreement. Any failure of the tenant(s) to comply with the terms of such
documents shall be a default hereunder. The leasing Owner is responsible with
complying with all applicable laws governing leasing of residential units and must
provide a copy of the executed lease to the non-leasing Owners prior to the
commencement of the lease term.
Each leasing Owner shall provide their tenant with a current copy of this
Agreement including the Community Rules (as described in Section 6.4) then in effect
and shall be responsible for compliance by such tenant with all of the provisions of this
Agreement. Any Owner that leases or rents their Occupancy Area shall be responsible
for the payment of all insurance policy premium increases and all other costs for any
insurance policy or policies obtained and maintained by the Owners arising from such
lease or rental of their Occupancy Area.
The leasing Owner shall comply with all applicable laws governing residential
tenant evictions. All expenses, including reasonable attorneys’ fees, arising from
evicting a leasing Owner's tenant shall be borne solely by the leasing Owner.
The leasing Owner shall remain primarily responsible for the payment of all
Assessments, and other financial obligations under the Agreement. An Owner that
rents or leases their Occupancy Area shall deposit Seven Hundred dollars ($700.00) in
the Property Account and at all times maintain such deposit, as security for the
performance of the leasing Owner's financial obligations under this Agreement. The
Association, in its sole discretion, may: a) draw upon such deposit to offset any financial
obligation incurred by the leasing Owner with respect to the Property; and b) apply the
leasing Owner's rents toward any financial obligations incurred by the leasing Owner
with respect to the Property.
Nothing in this Agreement shall be construed to prohibit an Owner from sharing
their Occupancy Area with a non-owner roommate.
5. MAINTENANCE5.1 Maintenance and Improvements of Private Living Area. Each Owner
shall maintain and repair their Private Living Area at their sole expense including
painting, cleaning, and repair of all interior walls, floors, ceilings, fixtures, and
appliances and maintain all utility lines, plumbing, pipes, and conduits that serve their
Private Living Area exclusively.
An Owner may improve or alter their Private Living Area at their sole expense,
provided such improvement or alteration: a) does not impair the structural or acoustical
integrity of the Property; b) does not impair any easement on the Property, or the
utilities or other systems servicing the Property; c) does not involve altering or improving
any Common Area; d) complies with all applicable laws and regulations governing the
alteration or construction of residential property; and e) such Owner obtains the written
consent of a majority of the Owners for such improvement or alteration. Any Owner that
alters their Private Living Area as provided in this Section 5.1 shall be solely responsible
for the payment of all property tax increases, and insurance policy premium increases
and all other costs for any insurance policy or policies obtained and maintained by the
Owners arising from such improvement or alteration of the Owner’s Private Living Area.
In the event a of sale of the entire Property, and such improvements or
alterations of the Owner's Private Living Area cause the value of the Property to
increase, the other Owners shall reimburse such Owner their proportionate share of the
lesser amount of, the cost of the improvements, or the increase in value of the Property.
For instance, if there are 4 Owners and the cost of improvements were $500 and the
value of the property increased by $1000, the other Owners would reimburse the Owner
who made the improvements $125 each (¼ * $500). If the value of the property only
increased by $400, then the other Owners would reimburse the Owner who made the
improvements $100 each (¼ * $400). If such improvements or alterations do not cause
the Property value to increase, such Owner shall not be entitled to any reimbursement.
5.2 Limited Right of Entry. An Owner or their agents, may enter the Private
Living Area of another Owner whenever such entry is necessary to perform any
maintenance repairs or construction for which the Owners as a group are responsible.
Such entry shall be made with as little inconvenience as possible to the Owner
occupying such Private Living Area, and only upon at least twenty-four (24) hours prior
written notice to such Owner, except in the case of an emergency.
5.3 Common Area Maintenance and Improvements. The Owners shall share
the cost in keeping and maintaining the common Area in good condition and repair as
described in this Agreement.
No alterations or improvements shall be made to the Common Area without the
unanimous agreement of all the Owners and all Owners shall contribute to such
improvements in proportion to their Interest in the Property.
The Owners shall not be responsible for any maintenance, repairs or
replacements of the Common Area caused by the willful or negligent acts or omissions
of any Owner, or such Owner’s family, room mates, guests, or tenants (“Guests”). An
Owner shall be responsible for such acts caused by their Guests. If the repair is
covered by the Owners’ blanket insurance policy the Owners shall be responsible for
arranging for repairs and the Owner responsible for the damage to the Property shall
pay any deductible pursuant to the insurance policy and any resulting increase in the
policy premiums. The repair or replacement of any items excluded from coverage under
such blanket policy shall be the responsibility of the Owner responsible for the harm. If
the responsible Owner fails to repair or replace such excluded items, or pay any costs
described in this subsection, any Owner may perform the maintenance, make the
repairs or replacements, or pay such costs and be entitled to immediate reimbursement
for the cost thereof from the responsible Owner as provided in Section 16.2 below
6. GOVERNANCE
6.1 Management. The Owners shall not form a business entity or partnership for
the purpose of operating or managing the Property. However, the Owners may hire a
manager upon the unanimous written consent of all the Owners.
6.2 Voting Rights. Each Owner shall have one vote on issues affecting Property
and the Owners' Interest (“Matters”) regardless of percentage ownership. Individuals
residing on the Property that are not Owners shall not have voting rights. However,
Guests (as defined in Section 5.3 above) shall at all times be subject to the provisions of
this Agreement.
6.3 Formal Meetings. There shall be no requirement for formal meetings to vote
on Matters except the Owners shall meet annually to determine Assessments as
described below. All decisions of the Owners on Matters not already specified by this
Agreement shall require unanimous agreement.
6.4 Community Rules. The Owners may from time to time, subject to this
Agreement, adopt and amend written rules of general application to the Property
(“Community Rules”). Community Rules establish affirmative and negative covenants,
easements, and restrictions that run with the land. By entering into this Agreement
each Owner acknowledges and agrees that the use, enjoyment, and marketability of
their Interest can be affected by these provisions and that the Community Rules may
change from time to time by as agreed to by a majority of the Owners. Such
Community Rules shall be binding on all Owners and Guests. A copy of the Community
Rules, as they may from time to time be adopted, amended or repealed, shall be mailed
or otherwise delivered to each Owner. The Community Rules, including any
amendments thereto, are expressed on Exhibit B, attached to this Agreement and
incorporated herein by this reference.
7. Books and Accounts7.1 Bank Accounts. All sums received or collected by the Owners from
Assessments, together with any interest or late charges thereon, shall be promptly
deposited in one or more insured checking, savings or money market accounts opened
in the names of all the Owners in a bank or savings and loan association selected by
the Owners (“Property Account(s)”). All funds deposited in a Property Account shall be
used solely for the benefit of the Property or distributed to the Owners pursuant this
Agreement.
7.2 Payments. Except for payments on items specified in Assessments, and
interest on debts secured by the Property, withdrawals from any such account in excess
of Four Hundred Dollars ($400.00) shall require the written consent of all the Owners. In
the event the Owners give such written consent, the actual withdrawals may then be
made upon the designated signature of any one (1) of the Owners or such other
representatives as the Owners may designate in writing. For the purpose of determining
whether unanimous consent for a withdrawal is required, all costs which relate to a
single project must be aggregated. If the total cost of all amounts to be expended for
such project exceeds Four Hundred Dollars ($400.00), unanimous written consent of all
the Owners is required before commencing any withdrawals relating to such project.
7.3 Books of Account. At each annual meeting, the Owners shall designate one
Owner among them to supervise the monthly collection of all Assessments, the deposit
of such amounts to the Owners’ mutual bank accounts, and the payment of Common
Expenses, and to maintain the Property books and records. Such books and records,
and accounts shall be available for inspection by the Owners at upon notice to the
designated Owner at a mutually agreed upon time within seven (7) days of such
request.
8. ASSESSMENTS
8.1 Equally Shared Expenses. Each Owner shall equally share expenses
related to: a) maintaining the Common Area; b) minor maintenance and repairs (repairs
that have a negligible impact on the value of the property (e.g., fixing an appliance, air
conditioner, furnace, etc...); and c) commonly shared expenses for items such as
electricity, gas, water, garbage pick-up, cable, satellite, Internet, or telephone expenses.
8.2 Proportionately Shared Expenses. Each Owner shall contribute
proportionally to expenses that relate to their proportionate Interest in the Property
including: (a) major maintenance and repairs (e.g., repairs such as rewiring, replacing
defective plumbing within the walls, installing a new roof, repairing the foundation, etc...)
(b) fire, liability or other insurance premiums relating to the Property; and (c) property
taxes, assessments or other charges assessed against the Property.
8.3 Assessments. The Owners shall levy and collect assessments to cover
foreseeable Property expenses including: a) Equally Shared Expenses; b)
Proportionately Shared Expenses; and c) a default fund.
8.4 Initial Assessments. Within 30 days following the execution of this
Agreement, the Owners shall create a pro forma operating budget estimating the total
expenditures to be paid from the Property Account(s), including a reasonable reserve
for contingencies. Then, the Owners shall levy charges for each Owner based on the
budget as Assessments for the upcoming year.
8.5 Subsequent Assessments. At least thirty (30) days prior to the beginning of
the Owners' first complete fiscal year, and each fiscal year thereafter, the Owners shall
estimate the total Assessments for the upcoming year and create a budget. Then, the
Owners shall levy charges for each Owner based on the budget as Assessments for the
upcoming year.
8.6 Exhibit C. Initial and Subsequent Assessments shall be set forth on Exhibit
C, attached to this Agreement and incorporated herein by this reference.
8.7 Special Assessments. Any time the Assessment for any fiscal year is
insufficient due to extraordinary expenses not contemplated in the budget prepared for
such fiscal year, the Owners shall levy and collect a special assessment, applicable to
the remainder of the fiscal year to defray, in whole or in part, the shortfall. Special
Assessments shall be due as a separate debt of each Owner and shall be payable in
full to the Association within such period as the Association shall determine to be
appropriate under the circumstances.
8.8 Due Date and Default. Each Owner’s Assessment share shall be due on the
date specified in Exhibit C. In the event an Owner is more than seven (7) days late, the
non-defaulting Owners shall be entitled to collect a late fee equal to ten percent (10%)
of such assessment in addition to invoking any of the remedies set forth in this
Agreement.
9. MORTGAGE
9.1 Mortgage. Each Owner shall pay their share of any payments due and that
become due on all indebtedness secured by a deed of trust to the entire Property. Each
Owner’s share of the payments due and to become due on the promissory note are
specified on Exhibit D, attached to this Agreement and incorporated herein by this
reference. The Owners shall review and, if necessary, revise each Owner’s share of
such indebtedness not less than twice a year, to reflect each Owner’s then current
outstanding liability for such indebtedness.
9.2 Exhibit D. Details on the Mortgage and each Owner’s responsibility relating
to the Mortgage is set forth on Exhibit D of this Agreement.
9.3 Due Date and Default. Each Owner’s share of the Mortgage shall be due on
the date specified in Exhibit D. In the event an Owner is more than seven (7) days late,
the non-defaulting Owners shall be entitled to collect a late fee equal to ten percent
(10%) of the amount due in addition to invoking any of the remedies set forth in this
Agreement. The Owners shall apply such late fee(s) to any late fees charged by the
holder of the promissory note or entity servicing the loan.
10. INSURANCE 10.1 Scope of Insurance Coverage. The Owners shall purchase, obtain and
maintain the following types of insurance:
(a) Fire and Casualty Insurance. A blanket policy or policies of fire and casualty
insurance for the full replacement value of the Property and all improvements thereon.
The insurance shall be kept in full force and effect at all times and the full replacement
value of the insured property shall be redetermined on an annual basis. The policy or
policies required hereunder shall provide amounts or coverage as shall be determined
by the Owners and shall name as insureds all of the Owners and their mortgagees as
their respective Interests may appear.
(b) Earthquake Insurance. A blanket policy for earthquake insurance for the
Property and insurable improvements in the Property to the extent available at
commercially reasonable rates.
10.2 Coverage Not Available. In the event any insurance policy, or any
endorsement thereof, required by Section 10.1 above, is for any reason not available,
then the Owners shall obtain a substitute policy or endorsement as may be available
which provides, as nearly as possible, the coverage described above.
10.3 Annual Adjustment. The Owners shall annually review all policies of
insurance on the Property and make adjustments, if necessary, to provide such
coverage and protection as the Owners may deem prudent or as reasonably required
by any mortgagee with a first priority lien against the entire Property.
11. REFINANCING
11.1 Refinancing. The Owners agree that no debt secured by a lien against the
entire Property shall be refinanced unless unanimously approved by all the Owners,
except as provided in this Section 11. The Owners may obtain refinancing without the
Owners prior consent for the following purposes:
(a) Sale of an Owner’s Interest within ninety (90) days.
(b) To pay off and remove the lien of any existing debt secured by a lien against
the entire Property that will mature within ninety (90) days.
Owners shall cooperate to obtain such refinancing. Owners’ cooperation shall
include submitting loan applications, granting lenders’ reasonable requests for access to
Owners’ credit information, and providing copies of Owners’ tax returns and such other
information as lenders may reasonably require to approve a loan.
11.2 Refinancing Expenses. Refinancing expenses shall be allocated to
Owners in proportion to their then-existing debt shares, except that all expenses arising
from a refinancing for the sole purpose of facilitating an Owner’s sale of their Interest
shall be borne exclusively by such selling Owner.
11.3 Assumable Loans. In connection with the refinancing of any loan secured
by the entire Property, the Owners shall reasonably attempt to secure a loan that is
assumable; preferably partially assumable.
12. SALE OF OWNERSHIP INTEREST TO A THIRD PARTY.
12.1 Limitation on Transferees. No Owner shall sell their Interest, whole or in
part, to any entity that may not legally hold property as a tenant in common. Any such
transfer is hereby void and of no effect (e.g., corporations, limited liability companies,
and partnerships).
12.2 Right of First Refusal. Each Owner grants each of the other Owners the
right of first refusal with respect to any proposed sale or transfer of any portion of an
Owner's Interest as set forth below.
(a) Notice. Should an Owner desire to sell or transfer (“Selling-Owner”), all or
any portion of their Interest to a third party they shall first give each of the other Owners
(“Remaining-Owners”) Notice of the terms of their proposed offer (“Offer”). The delivery
of such Notice by the Selling-Owner shall constitute the Selling-Owner's offer to sell
their Interest to the Remaining-Owners at the price and on the terms and conditions
stated therein.
(b) Election. The Remaining-Owners shall have ten (10) days from the effective
date of such Notice to accept or reject such Offer. If more than one Remaining-Owner
elects to purchase the Selling-Owner's Interest, the Selling-Owner may sell to any such
Remaining-Owner at the Selling-Owner's sole discretion. If no Remaining-Owner elects
to accept the Offer within the ten (10) day period, then the Selling-Owner may sell to
third parties at the terms contained in the Offer subject to the provisions of Section 12.3
below.
(c) Other Events Constituting Offers To Sell. Upon the occurrence of any of
the events enumerated below, such event shall be deemed to constitute an offer to the
Remaining-Owners by the affected Owner, or their executor, trustee, personal
representative, or successor-in-interest, as the case may be, and subject to the
requirements of this Section 12.
(i) The death of an Owner;
(ii) The voluntary or involuntary filing of a petition in bankruptcy or for the
protection under similar insolvency laws or any general assignment of assets for the
benefits of creditors; or
(iii) The entry of a final decree of divorce or dissolution of marriage which
transfers the Owner’s Interest to any person not a party to this Agreement (provided,
however, that the Owner whose Interest was so transferred shall have a first option for
ten (10) days from entry of such decree to purchase their former Interest, prior to the
right of first refusal held by the other Owners pursuant to this Section 12).
12.3 Owner Approval Prior to Sale to a non-Owner. Selling-Owner shall not
sell their Interest in the Property without first: a) providing the Remaining-Owners the
prospective buyer's standard form loan application, credit report, tax returns, and any
information the Remaining-Owners may reasonably request; and b) receiving approval
by all the Remaining-Owners of the prospective buyer. Such approval shall not be
unreasonably withheld. The Remaining-Owners shall have no more than ten (10) days
after receiving such information to object in writing of such prospective buyer. If the
Remaining-Owners fail to inform the Selling-Owner of their objection to a prospective
buyer, and their reason for it in writing, within the time provided, they shall be deemed to
have consented to the sale. The Remaining-Owners shall provide an approved
prospective buyer with their credit report, tax returns, and any information such
approved prospective buyer may reasonably request.
13. SALE OR EXCHANGE OF ENTIRE PROPERTY. Except as expressly provided
in this Agreement, the entire Property may be sold only upon the unanimous consent of
all the Owners. Such a sale is not subject to the provisions of Section 12 above.
14. EFFECT OF TRANSFER. Upon the sale or other transfer of a Selling-Owner's
Interest, the transferee (“New-Owner”) shall become a tenant-in-common with the
Remaining-Owners. A New-Owner's rights, interests and obligations in and to the
Property shall be subject to this Agreement and the allocation of proceeds from the
New-Owner’s purchase shall be governed and determined in accordance with Section
18 below. A New-Owner shall be personally liable for any unpaid assessments that
remain unpaid after escrow, and if unpaid by the New-Owner, may be foreclosed upon
as provided in this Agreement.
15. ENCUMBRANCE OF INTERESTS. Each Owner covenants and agrees that
they shall not encumber, hypothecate, mortgage, pledge, assign or otherwise alienate
for security purposes their Interest without first obtaining the prior unanimous written
consent of all the other Owners. Any such lien, encumbrance, mortgage, pledge,
judgment or other charge placed against the Property without such consent shall be
removed from the Property by such Owner within thirty (30) days from the date it is
placed on the Property. Failure to remove the same within thirty (30) days shall
constitute a material breach of this Agreement and any non-breaching Owner may at
the sole cost and expense of the breaching Owner, immediately pay such monies or
take such other actions as may be necessary to remove such lien or encumbrance. Any
sums so paid, together with all costs incurred in removing such liens, including
reasonable attorney fees, shall be regarded as a loan to the Defaulting Owner,
enforceable and repayable as set forth in Section 16.2, below.
16. DEFAULTS AND REMEDIES16.1 Defaults. The following events shall be deemed a default (“Default”) if not
cured within seven (7) days of the defaulting Owner’s receipt of written notice from a
non-defaulting Owner (except if the cure shall reasonably require more than seven (7)
days and the defaulting Owner has commenced action to cure the default within such
time) (“Defaulting Owner”):
(a) An Owner’s failure to pay their full share of the Mortgage, Regular
Assessment, or Special Assessment when due for any two (2) consecutive months or
any four (4) months within a one (1) year period;
(b) An Owner’s failure to remove any involuntary lien or encumbrance against the
Property or to obtain a bond against such lien or encumbrance arising from action by
the defaulting Owner within thirty (30) days after receipt of written demand from any of
the Owners; or
(c) An Owner’s willful and persistent breach of any other financial obligations
under this Agreement.
16.2 Remedies. In addition to all other remedies permitted by law or under this
Agreement, any Owner or Owners, as the case may be, in compliance with the terms
and provisions of this Agreement (“Non-defaulting Owner”), shall have the remedies
described in this Section 16.2 against a Defaulting Owner. For all other violations of this
Agreement, a Non-defaulting Owner shall have the remedies provided in Section 23
below.
(a) Advance of Funds by Non-defaulting Owner. The Non-defaulting Owner
shall have the right, but not the obligation, to advance money owed by the Defaulting
Owner. The amount of such advance shall constitute a loan to the Defaulting Owner
and shall accrue interest from the date of advancement until paid in full at the higher of
the following rates: a) eighteen percent (18%); or b) the interest rate of the loan
secured by a mortgage on the Property plus eight percent (8%).
(b) Assignment of reserve funds, rents, issues, profits, or deposits. Any
such advance shall be due and repayable upon demand of the advancing Non-
defaulting Owner. Unless such advance is repaid on demand, together with interest as
set forth above, the Non-defaulting Owner shall have the option of obtaining repayment
from the Defaulting Owner’s rents, issues, profits, deposits, or the Defaulting Owner's
contribution to the default account, if any, which the Defaulting Owner shall immediately
restore.(c) Security for Advances. The Non-defaulting Owners shall have a lien upon
the Interest of the Defaulting Owner in the Property to the extent of such advances and
interest; provided, however that such lien shall not be perfected and may not be
foreclosed or otherwise enforced until recording of a Notice of Lien in the office of the
County Recorder where the Property is located. Such notice shall state the name of the
Defaulting Owner, the amount of the advance, together with the interest, costs and
reasonable attorneys’ fees, and a description of the property against which the lien has
been assessed. Each lien shall secure interest on any unpaid advance or assessment
and shall likewise secure costs of suit and reasonable attorney fees to be fixed and
awarded by the court in the event any action or suit is brought to collect such charges.
(d) Subordination of Lien. Any lien for advances or assessments provided for
under this Section shall be subordinate to the lien of any bona fide first or second
mortgage(s) or first or second deed(s) of trust now or that will be placed upon the
Defaulting Owner’s Interest subject to advances or assessments; provided, however,
that such subordination shall apply only to the advances or assessments which have
become due and payable prior to the sale of the Defaulting Owner’s Interest pursuant to
a decree of foreclosure of any such mortgage or deed of trust or pursuant to a power of
sale in such mortgage or deed of trust.
(e) Notice of Default. Any advance not repaid or assessment not paid within
fifteen (15) days after the due date shall be deemed to be in default and shall bear
interest from the due date at the rate specified in Section 16.2(a) above and the Non-
defaulting Owner may bring an action at law against the Defaulting Owner, who shall be
personally obligated to pay the same, or may foreclose the lien against the Defaulting
Owner’s Interest in the Property. No action shall be brought to foreclose the lien
securing any advance or assessment under this Section 16.2 less than ninety (90) days
following the mailing of a Notice of Lien described in Section 16.2(c) above signed by
the Non-defaulting Owners and recording of a copy of such notice in the Office of the
Recorder in the county where the Property is located.
17. RIGHT TO PURCHASE AS CONDITION PRECEDENT TO PARTITION. Each
Owner shall retain their right as a tenant-in-common to unilaterally seek and obtain a
partition and sale of the Property, and to otherwise act unilaterally with respect to their
Interest therein; subject, however, to the satisfaction or waiver by the other Owners of
the following conditions precedent:
17.1 Offer to Non-electing Owners. In the event that any Owner elects to have
the Property partitioned and sold, such Owner (“Electing Owner”) shall first be required
to offer to sell their entire Interest in the Property to the other Owners (“Non-electing
Owners”) as a condition precedent to the institution of legal action for partition and sale.
Such offer shall be made in writing to all the Non-electing Owners and shall contain the
price and terms on which said Property is being offered. The Non-electing Owners,
collectively and individually, shall have twenty (20) days, after the last Owner receives
such offer, to elect to purchase the Electing Owner’s Interest. Any election to purchase
shall be delivered to the Electing Owner in writing prior to the expiration of the twenty
(20) day period and such election shall specify whether the purchase price shall be at
the price stated in the offer or the fair market value of the Property as determined by
appraisal pursuant to Section 17.2. If there is more than one offer from individual Non-
electing Owners, the Electing Owner shall have the sole discretion to accept an offer
from among the Non-electing Owners.17.2 Appraisal Procedure. If the Non-electing Owner chooses to purchase the
Electing Owner's Interest based on appraisal, such appraisal shall be made using a
single qualified M.A.I. appraiser mutually agreed upon by the parties. If the parties
cannot agree on a single appraiser within fifteen (15) days of the effective date of the
Non-electing Owner’s notice of purchase, then each party shall select one (1) appraiser
so qualified within fifteen (15) days thereafter and the two (2) appraisers so selected
shall then select a single appraiser (the Designated Appraiser) similarly qualified within
fifteen (15) days following their designation. The Designated Appraiser shall make an
independent appraisal of the fair market value of the Property within thirty (30) days
from the date of their appointment.
17.3 Binding Effect of Price Election. In the event that the Non-electing Owner
elects to purchase the Electing Owner's Interest in lieu of partition at the price based on
the net sales price established by appraisal, rather than that set forth in the Electing
Owner’s initial offer to sell, this election shall be binding regardless of whether the
resulting price is greater or lesser than the initial offered price.
17.4 Payment of Purchase Price. In the event that the Non-electing Owner
accepts an offer to purchase an Interest in the Property, an escrow shall be established
at any responsible title company selected by the purchaser, and escrow shall close
within forty-five (45) days after such acceptance. Unless the parties otherwise agree,
the purchase price for such Interest shall be paid in cash at the time of purchase. The
title insurance premium and all other costs and expenses of escrow shall be borne and
paid for by the respective parties in accordance with the custom and practice then
prevailing in the city and county where the Property is located, provided that any
additional costs incurred to effect an exchange shall be paid by the party on whose
behalf they are incurred.
17.5 Failure to Purchase Entire Interest. If no Non-electing Owner elects to
purchase the Electing Owner’s entire Interest, the Electing Owner shall then have the
right to immediately and without further notice take all such steps as shall be necessary
to effect a court-ordered partition and sale of the Property.
18. PROCEEDS FROM SALE OF PROPERTY
18.1 Interest. An Owner that sells their Interest as provided in this Agreement,
shall be entitled to all proceeds realized from such sale less: a) the balance as of the
sale date of any liens or encumbrances against or allocable to the Interest of such
Owner as provided in this Agreement, the amount of such lien or encumbrance shall be
paid to the Property Account or to the Owners individually, as the case may be; and b)
all expenses for inspections, repairs to the Owner’s Interest, refinancing or loan
assumption fees, and other closing expenses arising from such sale.18.2 Entire Property. The Owners agree that upon the sale of the entire
Property, and following repayment of the outstanding principal and interest on all
indebtedness secured by blanket liens on the Property, the balance of proceeds, if any,
shall be divided among the Owners in proportion to their respective Interests plus any
reimbursement an Owner is entitled to pursuant Section 5.1 above, except that an
Owner’s share shall be reduced by the balance as of the date of the sale of any liens or
encumbrances against or allocable to the Interest of such Owner as provided in Section
16 and the amount of such lien or encumbrance shall be paid to the lienholder
Owner(s). In addition, all other costs and expenses allocated to the Owners in
connection with such sale, including, but not limited to, escrow costs, title insurance
premiums, and transfer taxes, shall be divided between the Owners in proportion to
their respective Interests.
19. ATTORNEY FEES AND COSTS. If any party hereto institutes any legal action or
arbitration to enforce or interpret this Agreement, or for damages for any alleged breach
of this Agreement, the prevailing party in such proceeding shall be entitled to
reasonable attorney fees in addition to all other recoverable costs and damages.
20. GOVERNING LAW . This Agreement shall be subject to, governed by, and
construed in accordance with the laws of the State of California.
21. AMENDMENT . This Agreement may be amended in whole or in part only by the
written agreement of all of the Owners. Amendments to any Exhibit of this Agreement
must be in writing but may be approved and signed by a majority of the Owners to be
effective. In the event of a conflict or inconsistency between properly executed
documents related to this Agreement, the following order of priority shall apply: a)
among this Agreement and amendments to the Agreement (“Agreement Documents”),
the most recent Agreement Document shall govern; b) among Exhibits to this
Agreement and amendments to such Exhibits (“Exhibit Documents”), the most recent
Exhibit Document shall govern; c) between Agreement Documents and Exhibit
Documents, Agreement Documents shall govern.
22. INDEMNITY. Each Owner shall indemnify and hold harmless each of the other
Owners from any and all expense and liability resulting from or arising out of any
negligence or misconduct on their part to the extent that the amount exceeds the
applicable insurance carried by the Owners on the Property.
23. DISPUTE RESOLUTION. Except as provided in Section 16 (and actions for
injunctive relief, to compel arbitration, or for unlawful detainer), any controversy, dispute,
or claim arising out of, in connection with, or in relation to the interpretation,
performance, or breach of this Agreement shall be resolved, at the request of any
Owner, as follows:23.1 Mediation. Before instituting any arbitration relating to the rights and/or
duties of the Owners under this Agreement, other than the payment or collection of any
Assessments, the Owner that desires to initiate such action (“Complainant”) must make
a good faith attempt to mediate such dispute in accordance with this Section. The
Complainant shall send the other party(ies) (“Respondent”) written notice of the nature
of the dispute, the facts giving rise to such claim and the Complainant’s desire to
mediate the matter (“Mediation Notice”). The Mediation Notice shall name a mediator
The mediator shall have at least three (3) years’ experience mediating real estate
disputes in the county where the property is located and no personal or business
relationship with the either party. The parties shall share the cost of initiating and
conducting mediation equally. Within seven (7) days of Respondent’s receipt of the
Mediation Notice, Respondent shall inform Complainant in writing if Respondent does
not agree with Complainant’s choice of mediator (“Rejection Notice”). Such Rejection
Notice shall include the name of Respondent’s choice of a qualified mediator as
provided in this Section. Complainant and Respondent’s mediators shall then select a
third qualified mediator to hear the dispute. Within thirty (30) days after the final
mediator is chosen, the parties shall schedule and attend a mediation session and
attempt in good faith to resolve their dispute. If the mediation does not resolve the
dispute or if the Respondent refuses to attend such mediation, the Complainant may
commence arbitration as provided below. The requirements of this provision shall not
apply under circumstances where the Complainant would be entitled to injunctive or
declaratory relief.
23.2 Arbitration. If the parties fail to resolve their dispute through mediation as
described in Section 23.1 above, the dispute shall be submitted to, and conclusively
determined by binding arbitration conducted by a retired judge from the panel of
JAMS/Endispute, Inc., appointed pursuant to the provisions of California Code of Civil
Procedure §638(1). The parties intend this Agreement to be considered a “reference
agreement” specifically enforceable in accordance with §638(1). If the parties cannot
agree upon a member of the JAMS/Endispute panel, one shall be appointed by the
Presiding Judge in the county where the Property is situated. The arbitrator shall award
costs and attorney fees to the prevailing party and shall have the authority to order a
sale of the Property in accordance with Code of Civil Procedure §872.820 to effectuate
any remedy provided in this Agreement. The provisions of this Section 23.2 shall not
preclude an Owner from seeking injunctive or other provisional or equitable relief to
preserve the status quo pending the parties’ resolution of their dispute, and the filing of
an action seeking injunctive or other provisional relief shall not be construed as a waiver
of that Owner’s arbitration rights.
NOTICE: BY INITIALING IN THE SPACE BELOW, YOU ARE AGREEING TO
HAVE ANY DISPUTE ARISING OUT OF THE MATTERS INCLUDED IN THE
“ARBITRATION” PROVISION DECIDED BY NEUTRAL ARBITRATION AS PROVIDED
BY CALIFORNIA LAW AND YOU ARE GIVING UP ANY RIGHTS YOU MIGHT
POSSESS TO HAVE THE DISPUTE LITIGATED IN A COURT OR JURY TRIAL. BY
INITIALING IN THE SPACE BELOW, YOUR ARE GIVING UP YOUR JUDICIAL
RIGHTS TO DISCOVERY AND APPEAL, UNLESS SUCH RIGHTS ARE
SPECIFICALLY INCLUDED IN THE DISPUTE RESOLUTION PROVISION. IF YOU
REFUSE TO SUBMIT TO ARBITRATION AFTER AGREEING TO THIS PROVISION,
YOU MAY BE COMPELLED TO ARBITRATE UNDER THE AUTHORITY OF THE
CALIFORNIA CODE OF CIVIL PROCEDURE. YOUR AGREEMENT TO THIS
ARBITRATION PROVISION IS VOLUNTARY.
WE HAVE READ AND UNDERSTAND THE FOREGOING AND AGREE TO
SUBMIT DISPUTES ARISING OUT OF THE MATTERS INCLUDED IN THE
“ARBITRATION” PROVISION TO NEUTRAL ARBITRATION.
Initials: __________________
Initials: __________________
Initials: __________________
Initials: __________________
24. NOTICES. Notices and other communications required or permitted by this
Agreement from one Owner to another must be made in writing and delivered
personally, by registered mail, conveyed by facsimile transmission, or by E-mail. If an
Owner moves from the Property without providing the remaining Owners a forwarding
address, the remaining Owners shall provide Notice to the non-resident Owner by all
means listed above. Notice shall be deemed delivered and effective upon the earlier of,
an Owner's receipt of such notice or forty-eight (48) hours after mailing, faxing, or E-
mailing such notice.
25. SEVERABILITY . In the event any part or provision of this Agreement shall be
determined to be invalid or unenforceable under the laws of the State of California, the
remaining portions of this Agreement which can be separated from the invalid,
unenforceable provisions shall, nevertheless, continue in full force and effect. To the
extent such part or provision is deemed invalid or unenforceable, it shall be construed to
give effect to the intent of such part or provision to the extent such part or provision may
be held valid and enforceable.
26. NO WAIVER. The waiver by an Owner of any covenant contained in this
Agreement shall not be deemed a continuing waiver of same or of any other covenant
contained herein.
27. BINDING. This Agreement shall inure to the benefit of, and shall be binding
upon, each of the Owners, their heirs, assigns and successors in interest and shall
constitute a covenant running with the land.
28. SEPARATE COUNSEL. The Owners are advised to consult with their own
separate legal, tax, and financial counsel before signing this Agreement. Furthermore,
each Owner acknowledges that they are relying exclusively on the advice and counsel
of their own separate legal, tax, and financial counsel in deciding to enter into this
Agreement.
Each Owner has executed this Agreement to be effective as of the Effective Date.
OWNERS:
Print Name: Sign: Date:
Print Name:Sign: Date:
Print Name:Sign: Date:
Print Name:Sign: Date:
EXHIBIT A
to the Tenancy in Common Agreement dated
PROPERTY DESCRIPTION AND PRIVATE LIVING AREAS
Capitalized terms in this Exhibit shall have the same meaning assigned to those terms in
the Agreement.
EXHIBIT B
to the Tenancy in Common Agreement dated
COMMUNITY RULES
Capitalized terms in this Exhibit shall have the same meaning assigned to those terms in
the Agreement.
The Property shall be used exclusively for residential purposes in conformity with the
Agreement and the requirements imposed by applicable zoning or other applicable laws. The
total number of Owners shall not exceed and the total number of tenants
shall not exceed . This provision is not intended to prohibit occupancy by
children.
No illegal activities shall be carried out or conducted on the Property. No noxious or
offensive activities shall be carried out or conducted on the Property which is or could become
an unreasonable annoyance or nuisance to other Owners.
No motor vehicle shall be constructed, reconstructed or repaired within the Property and
no dilapidated or inoperable vehicle, including vehicles without a wheel(s) or an engine, shall be
stored on the Property. However, this provision shall not apply to emergency vehicle repairs
that may be finished in a reasonable period of time. Campers, boats, trailers, and commercial
vehicles are not to be parked on the Property.
Except as pertaining to leasing described above, nothing shall be done or kept within
the Property without the unanimous consent of the Owners: a) that will increase the rate of any insurance policy insuring the Property; or b) cause any improvements on the Property to be
uninsurable against loss by fire or casualty or result in the cancellation of any insurance policy.EXHIBIT C
to the Tenancy in Common Agreement dated
Calculation of Assessments
Capitalized terms in this Exhibit shall have the same meaning assigned to those terms in the Agreement.
Estimated Monthly Equally Shared Expenses (“ESE”)
Description Estimated Cost Per Month
Minor Maintenance and Repairs
Electricity
Gas
Water
Trash Removal
Cable or Satellite
Internet
Telephone
Estimated Monthly Proportionately Shared Expenses (“PSE”)
Description Estimated Cost Per Month
Major Maintenance and Repairs
Insurance Premiums
Property Taxes
Default Fund
Total Estimated ESE:
Total Estimated PSE:
Box 1 Box 2 Box 3 Box 4
% Ownership Share of ESE Share of PSE Monthly
Assessment
Owner 1
Owner 2
Owner 3
Owner 4
notes From Section 2.3 of the Agreement = ½ x total ESE = Box 1 x PSE = Box 2 + Box 3
Monthly Assessments are due on or before:
EXHIBIT C (continued)
to the Tenancy in Common Agreement dated
Assessment Payment Record
Owner 1 Amount of Monthly Assessment: $
Payment # Due Date Date Paid Late Fee Date Late Fee Collected
1
2
3
4
5
6
7
8
9
10
11
12
Owner 2 Amount of Monthly Assessment: $
Payment # Due Date Date Paid Late Fee Date Late Fee Collected
1
2
3
4
5
6
7
8
9
10
11
12
EXHIBIT C (continued)
to the Tenancy in Common Agreement dated
Assessment Payment Record (continued)
Owner 3 Amount of Monthly Assessment: $
Payment # Due Date Date Paid Late Fee Date Late Fee Collected
1
2
3
4
5
6
7
8
9
10
11
12
Owner 4 Amount of Monthly Assessment: $
Payment # Due Date Date Paid Late Fee Date Late Fee Collected
1
2
3
4
5
6
7
8
9
10
11
12
EXHIBIT D
to the Tenancy in Common Agreement dated
MORTGAGE
Capitalized terms in this Exhibit shall have the same meaning assigned to those terms in the Agreement.
If an Owner makes additional payments toward the principal, the Owners must recalculate % loan
responsibility and readjust the minimum monthly payment due from each Owner at least 2x per year.
This is not an issue if all Owners make the minimum payment. See Section 9.1 of the Agreement.
An Owner cash rich but income poor will apply a large down payment, have lower mortgage payments,
and have more equity in the Property. An Owner cash poor but income rich will apply a low down
payment, have higher mortgage payments, and have less equity in the Property. In the event of default,
the bank will look to the total equity in the Property for recovery. This exposes the Owner making the
larger down payment to greater risk. Section 16 of the Agreement deals with an Owner’s Remedies in
the event the other Owner defaults.
Total Purchase Price:
Total Down Payment:
Loan Amount:
Minimum Payment:
Due Date:
Box 1 Box 2 Box 3 Box 4
Owner Interest in
Property Interest in
Property x total purchase price
Down Payment
Share of
Indebtedness (amount)
Owner 1
Owner 2
Owner 3
Owner 4
notes
This is the
percentage from
Section 2.3 of the Agreement. The sum of both amounts should
equal the total
purchase price. The sum of both down payments
should equal the total down payment.
= box 2 - box 3
Box 5 Box 6
Owner Share of Indebtedness
(percentage) Minimum Monthly Payment Due
Owner 1
Owner 2
Owner 3
Owner 4
notes = (box 4/total loan amount) = box 5 x minimum payment
EXHIBIT D (continued)
to the Tenancy in Common Agreement dated
MORTGAGE
Payment Record
Owner 1 Minimum Monthly Mortgage Payment: $
Payment # Due Date Date Paid Amount Paid Amount in
Excess of Min
Late Fee
Date Late
Fee
Collected
1
2
3
4
5
6
7
8
9
10
11
12
Owner 2 Minimum Monthly Mortgage Payment: $
Payment # Due Date Date Paid Amount
Paid Amount in Excess of
Min
Late Fee
Date Late Fee
Collected
1
2
3
4
5
6
7
8
9
10
11
12
EXHIBIT D (continued)
to the Tenancy in Common Agreement dated
MORTGAGE
Payment Record (continued)
Owner 3 Minimum Monthly Mortgage Payment: $
Payment # Due Date Date Paid Amount Paid Amount in
Excess of Min
Late Fee
Date Late
Fee
Collected
1
2
3
4
5
6
7
8
9
10
11
12
Owner 4 Minimum Monthly Mortgage Payment: $
Payment # Due Date Date Paid Amount
Paid Amount in Excess of
Min
Late Fee
Date Late Fee
Collected
1
2
3
4
5
6
7
8
9
10
11
12
