Tenancy Common Agreement

Tenancy in Common Agreement (Unmarried Couple)

This Tenancy in Common Agreement (“Agreement”), effective as of (“Effective Date”), is between:

1. (full name) having an address at (address); and

2. (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, to designate the Owners' respective ownership interests, and to ensure such ownership interests remain unchanged in the event the Owners ever marry each other.

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.

2.3 Each Owner's fractional undivided interest (each the respective Owner's “Interest”) in the Property is as follows:

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. The respective Owners are at times referred to as “Owner 1” and “Owner 2” 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.

3.2 Common Area. Any area not designated as a Private Living Area is the Common Area.

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.

5. MAINTENANCE

5.1 Maintenance and Improvements of Private Living Area. Each Owner shall maintain and repair their Private Living Area at their sole expense.

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 maintenance, repairs, or construction.

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.

6. GOVERNANCE

6.1 Management. The Owners shall not form a business entity or partnership for the purpose of operating or managing the Property.

6.2 Voting Rights. Each Owner shall have one vote on issues affecting Property and the Owners' Interest (“Matters”) regardless of percentage ownership.

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.

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”).

7. Books and Accounts

7.1 Bank Accounts. All sums received or collected by the Owners from Assessments shall be promptly deposited in Property Account(s).

7.2 Payments. Withdrawals from any such account in excess of Four Hundred Dollars ($400.00) shall require the written consent of all the Owners.

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.

8. ASSESSMENTS

8.1 Equally Shared Expenses. Each Owner shall equally share expenses related to maintaining the Common Area and minor maintenance and repairs.

8.2 Proportionately Shared Expenses. Each Owner shall contribute proportionally to expenses that relate to their proportionate Interest in the Property.

8.3 Assessments. The Owners shall levy and collect assessments to cover foreseeable Property expenses.

8.4 Initial Assessments. Within 30 days following execution of this Agreement, the Owners shall create a pro forma operating budget.

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.

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.

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.

10. INSURANCE

10.1 Scope of Insurance Coverage. The Owners shall purchase, obtain and maintain the following types of insurance.

10.2 Coverage Not Available. If any required policy is unavailable, the Owners shall obtain a substitute policy or endorsement as may be available.

10.3 Annual Adjustment. The Owners shall annually review all policies of insurance on the 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 herein.

11.2 Refinancing Expenses. Refinancing expenses shall be allocated to Owners in proportion to their then-existing debt shares.

11.3 Assumable Loans. 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.

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.

12.3 Owner Approval Prior to Sale to a non-Owner. Selling-Owner shall not sell their Interest in the Property without first receiving approval by all the Remaining-Owners of the prospective buyer.

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.

14. EFFECT OF TRANSFER. Upon the sale or other transfer of a Selling-Owner's Interest, the transferee shall become a tenant-in-common with the Remaining-Owners.

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.

16. DEFAULTS AND REMEDIES

16.1 Defaults. The following events shall be deemed a default if not cured within seven (7) days of written notice from a non-defaulting Owner.

16.2 Remedies. In addition to all other remedies permitted by law or under this Agreement, any Owner or Owners in compliance with this Agreement shall have the remedies described in this Section.

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, subject to the following conditions precedent.

17.1 Offer to Non-electing Owners. An Electing Owner shall first be required to offer to sell their entire Interest in the Property to the other Owners.

17.2 Appraisal Procedure. If the Non-electing Owner chooses to purchase based on appraisal, such appraisal shall be made using a single qualified M.A.I. appraiser mutually agreed upon by the parties.

17.3 Binding Effect of Price Election. The 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. An escrow shall be established at any responsible title company selected by the purchaser.

17.5 Failure to Purchase Entire Interest. If no Non-electing Owner elects to purchase the Electing Owner’s entire Interest, the Electing Owner may proceed with partition and sale.

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 specified deductions.

18.2 Entire Property. Upon sale of the entire Property, the balance of proceeds shall be divided among the Owners in proportion to their respective Interests plus any reimbursement due.

19. ATTORNEY FEES AND COSTS. If any party institutes any legal action or arbitration to enforce or interpret this Agreement, the prevailing party 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.

22. INDEMNITY. Each Owner shall indemnify and hold harmless each of the other Owners from any and all expense and liability resulting from negligence or misconduct on their part.

23. DISPUTE RESOLUTION. Except as provided in Section 16, any controversy, dispute, or claim arising out of this Agreement shall be resolved by mediation and arbitration.

23.1 Mediation. The Complainant shall send the Respondent written notice of the nature of the dispute and the desire to mediate the matter.

23.2 Arbitration. If the parties fail to resolve their dispute through mediation, the dispute shall be submitted to binding arbitration.

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.

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.

25. SEVERABILITY. If any part or provision of this Agreement is determined to be invalid or unenforceable, the remaining portions shall continue in full force and effect.

26. NO WAIVER. The waiver by an Owner of any covenant contained in this Agreement shall not be deemed a continuing waiver.

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.

28. SEPARATE COUNSEL. The Owners are advised to consult with their own separate legal, tax, and financial counsel before signing this Agreement.

29. IN THE EVENT THE OWNERS MARRY EACH OTHER AFTER THE EXECUTION OF THIS AGREEMENT THE FOLLOWING PROVISIONS SHALL APPLY:

29.1 This Agreement shall remain in full force and effect.

29.2 Each Owner shall own their Interest in the Property as their separate property and not as community property.

29.3 Each Owner's Interest in the Property shall remain the same regardless of whether personal property or community property funds are used to make mortgage payments.

29.4 Repairs, maintenance, improvements, remodeling, and additions to the Property shall have no affect on each Owner’s Interest in the Property regardless of funding source.

29.5 Each Owner shall share in the appreciation or depreciation of the Property in proportion to their Interest as provided in Section 2 of this Agreement.

Each Owner has executed this Agreement to be effective as of the Effective Date.

OWNERS:

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 applicable laws.

The total number of Owners shall not exceed and the total number of tenants shall not exceed .

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.

No motor vehicle shall be constructed, reconstructed or repaired within the Property and no dilapidated or inoperable vehicle shall be stored on the Property.

Campers, boats, trailers, and commercial vehicles are not to be parked on the Property.

Except as pertaining to leasing, nothing shall be done or kept within the Property without the unanimous consent of the Owners that will increase insurance or render the Property uninsurable.

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”)

Major Maintenance and Repairs:

Insurance Premiums:

Property Taxes:

Default Fund:

Total Estimated ESE:

Total Estimated PSE:

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

Owner 2 Amount of Monthly Assessment: $

Payment # / Due Date / Date Paid / Late Fee / Date Late Fee Collected

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.

Total Purchase Price:

Total Down Payment:

Loan Amount:

Minimum Payment:

Due Date:

Owner 1 Interest in Property: | Down Payment: | Share of Indebtedness:

Owner 2 Interest in Property: | Down Payment: | Share of Indebtedness:

Notes:

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

Owner 2 Minimum Monthly Mortgage Payment: $

Payment # / Due Date / Date Paid / Amount Paid / Amount in Excess of Min / Late Fee / Date Late Fee Collected