Divided Interest

A divided interest in property refers to a shared ownership between two or more parties where how much each party owns can clearly be defined.

For example, if two investors pool their money at a 60/40 split to finance the purchase of the house, then they might decide that one would own 60% of it while the other would own 40%.

They would then have divided interest on the property.

There are various ways to structure this allocated ownership to ensure that each party would have a legal claim for his or her share of the property.

One of which is using a company with shares allocated according to the vested interest of parties involved and then making the company the owner of the property.

Tenants in common ownership is the most common method.

But doing it wrong can cause problems in the future too.

For example, if the house is held as a joint tenancy, then both owners would be equal owners with undivided interest and would not have a clear split defined by the law.

Sometimes, when ownership disputes occur between partners with undivided interest, courts have been observed to order the sale proceeds of a property to be shared among the partners, essentially converting the undivided interest to a divided one.

Under some circumstances, divided interest can also mean that one party owns a part of a house, while another owns another part of it.

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