Owner of 1/2 of a house

[Mary R.]

As owner of 50% of a house, what items should be in a contract with the other half owner to protect us both as singly and as partners planning to hire a management company and rent the house? Both owners are out of state.  One thing to consider is a now empty in-ground pool. This house was used as a rental with pool several years ago.

[Andy D.]

Is the house under your individual names or an LLC in which you're equal partners, and do you mean protection from outside parties or each other (or, ideally, both)?

Even if you haven't or don't plan to form an LLC, it's not a bad idea to notarize your contract/operating agreement to spell out "if this happens, we do this" for every conceivable potentiality regarding the property and each other - particularly with regards to if one of you wants to sell and the other doesn't, or if one of you ceases, even temporarily, being able to meet your obligations to the property for any reason at all.

Just a few of the things off the top of my head from one of my contracts:

Noting which parties contributed how much towards capital.

Establishing right of first refusal in the event of one party wishing to sell.

Where bank accounts, credit cards etc are held, and who can do what with them.

Cash flow protocol (all rental income goes into X account, $Y each money gets autotransferred to savings, $Z each month is put towards maintenance, etc).

Disbursements of surplus money in X account can only be made if certain conditions are met.

Explicit recognition that all bills may only have one party's name but are a shared responsibility between or across partners.

What items require unanimous consent to proceed from partners? Which items require 2/3? What demonstrates consent (a "yes" via email).

There are certainly more, but those are the ones that came to mind right away.