What should I ask the real estate lawyer?

[Folly]

Situation:
In the next couple of months I plan to collaborate with two other people to purchase a 3-flat in Chicago.
Everyone’s name will probably be on the mortgage and we will be using a lawyer to draw up a contract/agreement to define what everyone’s rights and responsibilities are; How much warning is required if someone wants to sell, buy-out rights of people wanting to stay, what the distribution will be of any profits made if we sell the whole thing at a later date, and so on.

We will meet with the lawyer in a few weeks to start this process. What are some non-obvious things that I should bring up or ask about during this meeting? Any suggestions on clauses that should be included in the agreement?

[Folly]

One bump before my boring thread sinks into obscurity.

[Robot_and_The_Duck]

I’m not sure how helpful this article is, since it relates to Australian law, but hopefully it will give you some sort of guideline about what to ask your lawyer.

The agreement should deal not only with how you’re entering the purchase but what happens if things come unstuck. “It needs to specify how the property will be marketed when it’s sold, for example, and what happens to any capital gain,” says McPhee. “All the parameters should be set down.”

Boyd agrees, saying in the event of a dispute the agreement should state how the property will be split up and how it’s valued before a sale. The latter often causes the biggest disputes when co-owners can’t agree on what the property is worth. “The agreement should have a clause that relies on two or three valuations at the time you want to sell,” she adds.

What about damage to the property?

A written agreement on expenses should also extend to who pays for what if you’re both living in the property, suggests McPhee. “One may have a girlfriend in England and the other a girlfriend in the same city, so the phone bill may be horrendous. Or if there’s a wild party held by one and the property is damaged, technically it’s a joint liability but there should be causation liability,” she adds. In other words, whoever causes the damage pays for it.

Or if somebody moves out?

It can get complicated if only one of you lives in the property and the co-owner has bought for investment. In this case, set out in your agreement very clearly that if land tax or capital gains tax is levied on the property because one co-owner does not live there, that person must pay the tax.

Hope this helps and good luck!

[Folly]

The ‘tenants in common’ thing is a good point.
If someone should happen to die, their portion should go to whoever is specified in their will, not automatically to the other co-owners.

[KSO]

Whether it makes sense from an ownership and tax perspective for you to each own individually or whether you should form a business entity (such as an LLC or partnership) to own the property. The operating agreement or partnership agreement could then specify rights of first refusal if one person wants to sell, ownership upon death of one owner, etc.