Luxebook November 2022

former Zillow executives Austin Allison and Spencer Rascoff, Pacaso was launched in October 2020. With Pacaso, buyers can own around 1/8 to 1/2 of a share in any of their properties. Doubling its domestic market since the launch, Pacaso operates in 25 destinations, some of which include top locations like Napa, Lake Tahoe, Aspen, Malibu, and Miami, and aims to launch an expansion through Europe, starting with Spain around the end of the year. After purchase, Pacaso manages the home including interior design, repairs, utilities, and property management, with owners splitting those operating costs and also paying a $99 fee per month. Benefits of co-ownership Co-ownership is a relatively safe bet for real estate investments, especially for first-time buyers. With a lowcost investment, co-ownership can be of great advantage when looking to buy a large asset like real estate for a reducedcost.It alsohelps reduceother costs suchas stamp duty, conveyancing and legal costs, mortgage insurance and property maintenance. One can acquire a home mortgage with great ease in co-ownership since lenders consider your total, combined income, living expenses, debts, and credit scores. Because the arrangement allows for cost sharing, it can render otherwise unattainable expenses within closer reach. Sudeep Chandran says that “With popular co-ownership platforms, owners can get a fully furnished home, filled with luxury amenities, state-of-the-art equipment and everything owners might possibly need, which once again saves up on the costing of the home.” In terms of management, co-ownership may also include a shared arrangement by which some of the responsibilities around the asset are divided between multiple parties. Joint ownership lets the owners share the less-than-fun tasks of home ownership and maintenance with their co-owners, thus lessening the burden of maintenance. Another bonus of co-ownership is the easy transfer of ownership rights, which depending on the form of Pacaso co-ownership either go to the other tenant/s or to an heir of the original owner post their passing. This often involves a process that is automatic and requires little or no paperwork to transfer property. Leaving behind added legal work, court hearings and other tedious processes, the transfer of ownership can be carried out by merely recording notice of the death of the joint tenant. Risks of co-ownership As with any investment, co-ownership is not without its risks. Some of the risks can be minimised if one goes through a company that specialises in shared ownership of properties. However, other unavoidable risks could include taxation problems, affected credit score and property disputes. A lack of flexibility is one of the main disadvantages of co-ownership. Since these are bound by contracts and contacts are legally binding, they can be somewhat hard to get out of. While the option to staircase your share of ownership in small increments offers more flexibility, the legal and admin costs can render it tedious. Financial risks associated with taxing is another major problem in co-ownership, even in tenants in common. Because of a financial liability among the tenants, the bills and debts are shared equally regardless of the share of each tenant. In any case, if one of the tenants struggles financially and is unable to pay their share of taxes, the other owners must comply and pay the other owner’s share as well in order to avoid having a tax lien placed on the property. Adding to the lack of flexibility, owners in a tenant in common ownership cannot do much in legal terms, if either of the owners decides to share their share of the property. Even though holding property as tenants in common allows for fractional shares, where the shares are divided into a 50-25-25 per cent interest, none of the owners can claim ownership of the other shares of the property. Each tenant reserves the right to sell their share of the property to anyone, and the other tenants cannot legally do anything about it. A lack of flexibility is a disadvantage with co-ownership 56|L U X E B O O K|N O V E MB E R 2 0 2 2 N O V E MB E R 2 0 2 2 |L U X E B O O K| 57

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