Help Regarding Contract between two Parties

[gsouth]

Hi and welcome to my first post! (im a newbie, please be nice! )

Anyway...me and my girlfriend have just purchased our first IP and are very excited! We’ve been making sure we haven’t missed anything and are doting all our I’s and crossing all our T’s.

We sat down the other night and maturely asked each other the question about “what if we break up?” We both agree that some form of contract should be in place if that in fact happens. (of course we have no intention of doing so....but it’s the old question, what if?!)

So, being that we are not married and have purchased a property (and mortgage!) 50/50, or as joint tenants, what would some of you experienced players suggest we put in our “break-up contract”?

I guess my questions are;
Do we just sell, pay out the mortgage and split the profit 50/50?
Do we add a option that one may buy out the other?
If we have this drawn up, does it/will it/should it be extended to other properties (planning on buy another IP within 2 years and PPOR 2 years after that)?
What happens if we get married? Would this contract become void or does that condition have to be written in?
And finally, does something like this have to be drawn up officially by a lawyer or can we do it ourselves?

Thanks for your help!

 

[Raddles]

Hi there
in essence what you are verbalising is a partnership agreement - there are rules for de factos which can come into force if you stay together for a longer period of time. If you marry - once again it depends upon your contributions and how long you stick together how things can be split up.
Partnership Agreements often have a provision that one party can buy out the other party - and if things can't be resolved - the partnership has to be wound up and the assets sold.
If you do a search on the net of partnership agreements - look at the sort of provisions that are important and discuss them with your partner. If the document is to have some binding effect (which the Family Court would observe) you need to both get independant legal advice - and have a certificate signed to that affect which is attached to your document.
It really is your call if you want to formalise arrangements to avoid any disputes further down the track.
thanks

 

[wylie]

Good on you for thinking ahead. With nearly half of marriages failing (and probably similar percentages of long term live in arrangements) it is good that you can discuss it now.

The cost of getting independent advice to be attached to any agreement will cost a little, but better than battling down the track.

I don't know what would happen to your agreement in the event you are together long term and have children because they change the dynamics of any relationship. Perhaps, like wills need to be changed with changes in circumstances, this proposed document could be changed and grow with you.

One thing mentioned recently during meetings regarding asset protection planning for my parents was that the planner said he saw many, many times where a divorcing couple worked things out very cordially, but he added that when one of the partners finds a new partner, things can (and often do) turn nasty. The new partner brings pressure to bear to get more than has been agreed on by the separating couple. Good point to bear in mind.

Good luck, Wylie.