Real Estate Co-Ownership Agreements

Land Sharing Agreement: The Right Way to Prevent Conflict Before It Begins

When some people hold together a property, land or a plot, the problem is usually not created on the day of purchase but months or years later: who is allowed to use, who pays, who decides on construction, whether it is possible to sell, and what happens if one of the partners wants to go out. That is exactly what a land sharing agreement is for.

A good sharing agreement is not a general document. It should draft in advance all the real points of friction between the partners, and transform joint ownership from a source of ambiguity into a clear set of rights, duties and decision mechanisms.

What must be in a good sharing agreement

• Distribution of actual uses of property or land, if relevant.
• How to make decisions about selling, renting, refurbishing, building or development.
• Distribution of current expenses, investments, levies, taxes, and irregular payments.
• A mechanism for selling a partner's part, first refusal right and exit route in the event of a dead end.

When is it especially important?

• Heirs who have received a joint property but do not intend to sell it immediately.
• Partners who purchase land for investment or a field for future development.
• Family members who hold together a commercial property, apartment or land.
• Partners who wish to avoid future deterioration toDismantling Share in Real Estate.

Why is it important to think about registration?

In many cases, it is not enough to sign an agreement. If the arrangement is to be effective for third parties, a suitable registration should also be examined in Israeli Land Registry and an orderly arrangement of the rights status. Therefore, a sharing agreement is sometimes directly integrated withregistration of rights with the Israeli Land Registry.

The Classic Mistake of Partners

Many partners assume that the good relationship will be enough, and therefore postpone the arrangement to a later stage. In practice, it is precisely when the situation is better that a proper agreement is reached. When the dispute already exists, every small question becomes a conflict. Therefore, a sharing agreement is a preventative tool, not just a legal document.

What to check before drafting the agreement

• What is the status of the registration and whether all parties do indeed hold rights to the same extent.
• Are there any planning limitations, building options or development that affect the division?
• Whether one of the partners has invested sums or actually owns a certain area.
• What the exit or sale strategy looks like if the relationship between the partners changes.

Even before purchasing a joint property or entering a joint investment, it is correct to check in advance the rights and risks documents, as detailed in the guidePreliminary Tests in a Real Estate Deal.