For starters, your ownership of the property will be protected against any liens, judgments, or lawsuits against you or the other co-owner.

In fact, the fact that you are not the legal owner of the property (the trust is) makes you an unlikely target of a lawsuit. Ask any lawyer. When a prospective client comes forward to file a lawsuit against you, the first thing the attorney will do is conduct an asset search to see what assets, such as real estate, you own. No assets? It doesn’t follow.

Disputes arising from differences between you and your co-owner are excluded by the trust agreement, which you and your co-owner draw up and agree to before you enter into the transaction.

Clearly explains the responsibilities of each party; who pays what and when, who does what and when. And of course, one of the most important obligations of the beneficiaries are the financial ones.

The trust agreement is very clear and direct. If either beneficiary fails to meet their financial obligations in a timely manner, their property interests are in jeopardy.

In the event of default by the resident owner (the one who occupies the property), the trustee serves them with a Notice to Quit.

A lengthy and costly partition and sale or foreclosure action is not needed, as the status of the former resident beneficiary has become that of a holdover, a non-paying occupant of the property, subject to eviction in 30 days in most jurisdictions.

It should also be obvious that since the property is not owned by the co-owner, their divorce or even spontaneous combustion has no effect on the property.

It is interesting to note that another peculiarity of the trust law is that the bank cannot claim the mortgage because you sold part of the property, the title is owned by the trust.

Now, the question remains, why would a person take on the responsibility of becoming a resident co-owner?

There is a huge group, literally millions of people who desperately want to own a home but do not or cannot qualify for a mortgage. So even though they have the income, they still can’t buy their house.

Typical people in this situation are small business owners, the self-employed, foreign nationals, and those who have just filed for bankruptcy or have foreclosures on their records.

The escrow allows these buyers to move into their own home immediately, to enjoy all the benefits and responsibilities of homeownership immediately and without worry.

The fact that the resident co-owner assumes the responsibility of paying the mortgage, doing maintenance and repairs while living in the property entitles him to all the tax benefits that apply to a homeowner. (In IRS parlance, they have all the “burdens” of home ownership.)

In exchange, they share the principal resulting from the mortgage payment, as well as a portion of the future appreciation, with you, their co-owner. And of course the psychological pride of ownership is also a benefit.

These people would jump at the chance to own their own home now without the intrusive banking bureaucracy. The co-ownership agreement allows them to have their cake and eat it, Now!

The co-ownership agreement could continue indefinitely or until your co-owner decides to get their own mortgage or wants to sell the property.

At that point, they would pay you your share of the appreciation and equity buildup and pay off your mortgage.

Ask your real estate agent or attorney to help you set up a New Equity Share program today!