Shared Equity Finance Agreements


DEFINITION of 'Shared Equity Finance Agreements'

When two parties purchase a primary residence because one party is unable to purchase the residence on its own. In a shared equity finance agreement, the financially stronger party acts as the investing owner, while the other party is the occupying owner. These agreements are usually charitable in nature, and state that the latter party must pay a proportional share of the mortgage payment as well as expenses, such as insurance and property taxes.

BREAKING DOWN 'Shared Equity Finance Agreements'

Shared equity finance agreements are often used by parents who desire to help their children purchase a home. In most cases the occupant pays the investor a monthly rental payment above and beyond the proportional share of expenses. The investing party is usually able to deduct its share of expenses paid, including depreciation.

  1. Property Tax

    A tax assessed on real estate by the local government. The tax ...
  2. Mortgage

    A debt instrument, secured by the collateral of specified real ...
  3. Mortgage Interest

    The interest charged on a loan used to purchase a residence. ...
  4. Residential Rental Property

    A type of property that derives more than 80% of its revenue ...
  5. Encumbrance

    A claim against a property by a party that is not the owner. ...
  6. Equity

    Equity is the value of an asset less the value of all liabilities ...
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