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.

RELATED TERMS
  1. Zone Of Possible Agreement

    Not a physical place, the zone of possible agreement is considered ...
  2. Trading Partner Agreement

    An agreement drawn up by two parties that have agreed to trade ...
  3. Third Party Beneficiary

    A person who will benefit from a contract made between two other ...
  4. American Rule

    A rule in law and economics that says attorney fees should be ...
  5. Stretch Loan

    A loan that is extended to another party, either an individual ...
  6. Third-Party Insurance

    An insurance policy purchased for protection against the actions ...
Related Articles
  1. Professionals

    Structure and Tax Considerations of Buy-Sell Agreements

    Structure and Tax Considerations of Buy-Sell Agreements
  2. Professionals

    Business Law: Contracts

    Business Law: Contracts
  3. Stock Analysis

    Party City Holdings: How It's Fared Since Its 2015 IPO (PRTY)

    Learn about Party City Holding's performance as a public company. Investors would have lost much more than the Russell 2000 Index by investing after the IPO.
  4. Personal Finance

    Master The Art Of Negotiation

    Learn the strategies that will help you to come out on top in any negotiation.
  5. Investing

    Birthday Party Planning

    Whether you're unemployed, a stay-at-home parent or retiree, working from home is a great career option.
  6. Professionals

    Marital Property Agreements

    Marital Property Agreements
  7. Professionals

    Business Uses of Life Insurance

    Business Uses of Life Insurance
  8. Professionals

    Introduction

    Introduction
  9. Entrepreneurship

    Is Equity Financing the Right Choice for Your Business?

    Discover the benefits and drawbacks of equity financing for a small business, and learn when equity financing should be used instead of debt financing.
  10. Professionals

    Types Of Accounts

    Individual Account An individual account is an account that is owned by one person. That person makes the determination as to what securities are purchased and sold. In addition, that person ...
RELATED FAQS
  1. How are arm's-length transactions determined by law?

    Determine if transactions are conducted at arm's length by checking if the parties to a contract are independent and transact ... Read Answer >>
  2. What is each party's role in a reverse repurchase agreement?

    Learn about the role of each party in a reverse repurchase agreement transaction, and find out why it's different if the ... Read Answer >>
  3. How do you make working capital adjustments in transfer pricing?

    Understand how working capital adjustments are applicable to transfer pricing. Learn about the arm's length standard and ... Read Answer >>
  4. How can a futures trader exit a position prior to expiration?

    A futures contract is an agreement to buy or sell a commodity at a pre-determined price and quantity at a future date in ... Read Answer >>
  5. How can an investor reduce interest rate risk?

    Learn about the different ways investors can reduce interest rate risk. Locking in interest rates increases certainty for ... Read Answer >>
  6. What are the benefits for a company using equity financing vs. debt financing?

    Learn what some of the principal advantages are for a company that chooses to utilize equity financing in preference to debt ... Read Answer >>
Hot Definitions
  1. Law Of Demand

    A microeconomic law that states that, all other factors being equal, as the price of a good or service increases, consumer ...
  2. Cost Of Debt

    The effective rate that a company pays on its current debt. This can be measured in either before- or after-tax returns; ...
  3. Yield Curve

    A line that plots the interest rates, at a set point in time, of bonds having equal credit quality, but differing maturity ...
  4. Stop-Limit Order

    An order placed with a broker that combines the features of stop order with those of a limit order. A stop-limit order will ...
  5. Keynesian Economics

    An economic theory of total spending in the economy and its effects on output and inflation. Keynesian economics was developed ...
  6. Society for Worldwide Interbank Financial Telecommunications ...

    A member-owned cooperative that provides safe and secure financial transactions for its members. Established in 1973, the ...
Trading Center