Tenancy in Common Agreement

Tenancy in Common Agreement (Married Couple)

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

1. having an address at ;

and

2. having an address at .

The above mentioned parties are a married couple and 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 the 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 1:     Owner 2:

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” and “Owner 2” in the Exhibits to this Agreement.

2.4 Separate Property (applicable only if Owners are husband and wife).

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

(b) 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 even if one Owner benefits over the other Owner because of the source of funds used to make such payments.

(c) Repairs, maintenance, improvements, remodeling, and additions (“Improvements”) to the Property shall have no affect on each Owner’s Interest in the Property regardless whether separate property or community property funds are used to make such Improvements.

(d) Each Owner shall share in the appreciation or depreciation of 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.

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.

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 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 complies with the Agreement and applicable laws and the Owner obtains the written consent of a majority of the Owners.

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.

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.

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.

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 one or more insured checking, savings or money market accounts opened in the names of all the Owners.

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, 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.

8. ASSESSMENTS

8.1 Equally Shared Expenses. Each Owner shall equally share expenses related to maintaining the Common Area, minor maintenance and repairs, and commonly shared expenses for utilities and communications.

8.2 Proportionately Shared Expenses. Each Owner shall contribute proportionally to expenses that relate to their proportionate Interest in the Property including major maintenance and repairs, insurance premiums, and property taxes.

8.3 Assessments. The Owners shall levy and collect assessments to cover foreseeable Property expenses including Equally Shared Expenses, Proportionately Shared Expenses, and 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.

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.

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.

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.

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. 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.

10. INSURANCE

10.1 Scope of Insurance Coverage. The Owners shall purchase, obtain and maintain fire and casualty insurance and earthquake insurance as described in this Agreement.

10.2 Coverage Not Available. If any required insurance is not available, 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.

11. REFINANCING

11.1 Refinancing. 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.

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

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.

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 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.

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 (“New-Owner”) 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 the terms and provisions of this Agreement shall have the remedies described in this Section 16.2 against a Defaulting Owner.

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 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 shall first be required to offer to sell their entire Interest in the Property to the other Owners as a condition precedent to the institution of legal action for partition and sale.

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.

17.3 Binding Effect of Price Election. The election to purchase based on appraisal shall be binding regardless of whether the resulting price is greater or lesser than the initial offered price.

17.4 Payment of Purchase Price. 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.

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 liens, encumbrances, and closing expenses arising from such sale.

18.2 Entire Property. 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.

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.

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, the Owner that desires to initiate such action must make a good faith attempt to mediate such dispute.

23.2 Arbitration. If the parties fail to resolve their dispute through mediation, the dispute shall be submitted to binding arbitration conducted by a retired judge from the panel of JAMS/Endispute, Inc.

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.

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 under the laws of the State of California, 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 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.

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

EXHIBIT A - Property Description and Private Living Areas

Capitalized terms in this Exhibit shall have the same meaning assigned to those terms in the Agreement.

Property Description:

Private Living Areas:

EXHIBIT B - 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 shall be stored on the Property.

EXHIBIT C - 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”)

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 Assessment Table

Owner 1 % Ownership:    Owner 2 % Ownership:

Monthly Assessments are due on or before:

EXHIBIT D - 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 Mortgage Allocation

Owner 1 Interest in Property:

Owner 2 Interest in Property:

Owner 1 Down Payment:

Owner 2 Down Payment:

Owner 1 Share of Indebtedness:

Owner 2 Share of Indebtedness:

Owner 1 Minimum Monthly Payment Due:

Owner 2 Minimum Monthly Payment Due:

Mortgage Payment Record

Owner 1 Minimum Monthly Mortgage Payment:

Owner 2 Minimum Monthly Mortgage Payment: