Threat #1 to Shared Ownership of the Family Cottage.

In my previous series, “Cottage Law Surprises and the Family Cottage” I identified how “surprises” that application of real estate law without proper planning can occur destroying a family’s continued ownership of the family cottage.

In this three part series, I will identify and explain three common threats to a family’s shared ownership in the family cottage that can occur without proper planning.

Threat # 1 - Failure of an heir to pay his/her share of the financial obligations for the family cottage.

If a cottage plan transferring shared ownership to heirs does not include an endowment to use for paying expenses or if the heirs are not renting the cottage out to third [parties to generate revenue, then the heirs as co-owners must pay the ongoing expenses of maintaining the family cottage.

But what if an heir can’t afford to pay his/her share of the expenses, or worse, just refuses to pay?

The only practical solution is for the other co-owners to sue the non paying owner for the proceeds. But this only works if the heir actually has the money to pay but is refusing to do so.

Although a cottage plan cannot magically print money a good cottage plan can build in terms that automatically apply in a situation when one or more heirs are not paying their share of expenses. Terms can be included to prevent occupancy/use of the cottage or automatically reduce a non paying heirs ownership share.Other sanctions can also be included to motivate all the heirs to pay.

Oftentimes just the existence of the sanctions as a remedy is enough to avoid a disgruntled heir from using his/her economic power to cause trouble to the other co-owner/heirs.

The next blog will focus on threat # 2 which is Conflicts among heirs on maintaining the family cottage.