Key Takeaways
- Owning a bach is becoming increasingly difficult due to high coastal property prices, making inheritance the only option for many.
- Multi-ownership of a bach can lead to family conflicts, emphasizing the need for agreements on management and expenses.
- Experts recommend property sharing agreements to manage costs and prevent disputes among siblings.
- Successful multi-ownership is possible with a well-drafted agreement that includes a process for sale and a buy-out clause.
- Communication and planning are crucial for families to avoid conflicts and heartbreak when inheriting a bach.
Introduction to the Great Kiwi Dream
The great Kiwi dream, after home ownership, is owning a slice of paradise – a bach at the beach, or even the lake. However, with coastal and lakeside property fetching astronomical prices, the chances of owning a house near the water are out of reach for many. For a lucky few, the only opportunity to keep the golden memories of a beach home holiday alive is through inheritance. But Auckland senior family lawyer Jeremy Sutton warns that multi-ownership carries many pitfalls and can often tear families apart after mum and dad are gone.
The Pitfalls of Multi-Ownership
Jeremy Sutton explains that multi-ownership can lead to difficulties, especially when one party uses the house more than the others, and not all parties are willing to share the outgoings. He advises that a contract or a mechanism that allows for circumstances to change, such as a buy-out clause, is necessary when siblings go into multi-ownership. This contract should outline the management of the bach, including who will pay the rates, manage the Airbnb, and handle repairs. Sutton emphasizes the importance of discussing these matters early on to avoid conflicts and heartbreak.
The Importance of Communication and Planning
Bayleys Matakana agent Kellie Bissett notes that owning a bach is a nice idea, but often beneficiaries are at different stages of their lives, making it unfair or impractical to hang onto it. She suggests that if there is division in the ranks, the most transparent and fair way to move forward might be to put the bach to the market, allowing those who can afford to hang on to it the opportunity to do so, while others can extract their share of the funds to help with their own circumstances. Bissett emphasizes that the decision often comes down to money and that selling the bach can provide opportunities for children’s education, house alterations, or medical interventions.
The Role of Property Sharing Agreements
Pidgeon Judd senior associate Alex Sheehan recommends that siblings who have inherited a bach put in place a property sharing agreement. This agreement should set out the payment of utilities and include a process for sale, such as a buy-out clause. Sheehan advises that this agreement should be reached as soon as possible after parents die and before any resentment grows. He also suggests that parents discuss their intentions and wishes with their children to avoid conflicts and heartbreak.
The Challenges of Multi-Ownership
Sheehan notes that successful multi-ownership is possible with a well-drafted agreement. He shares an example of a friend who has an intergenerational bach, and they have their own app to co-ordinate bookings and usage. However, Sheehan warns that adult children contending with others from a blended family can find themselves in a "very acrimonious" situation, emphasizing the need for a "pre-nup" or "contracting-out agreement" to avoid disputes and heartbreak.
Conclusion
In conclusion, owning a bach is a dream for many, but it can become a nightmare when it comes to multi-ownership. It is essential for families to communicate and plan ahead to avoid conflicts and heartbreak. By putting in place a property sharing agreement and discussing their intentions and wishes, families can ensure that the bach remains a source of joy and happiness for future generations. Successful multi-ownership is possible with a well-drafted agreement, and experts recommend seeking professional advice to navigate the complexities of inheriting a bach.