Buying a half-owned plot of land: risks and problems

The idea of buying a plot in half with a friend or partner to build two villas may seem attractive and an opportunity to save money on the purchase of the land. However, this strategy harbors a number of complications that can turn the dream of an ideal home into a real nightmare. At Valido Home, we believe in the importance of being well-informed in order to make smart decisions, so we will explore why this option can be considered, if not articulated correctly from the beginning, one of the worst ideas in the world of real estate investment.

Who is the True Owner?

The first pitfall is the ownership of the property. By purchasing a half-owned plot of land, both investors become co-owners of the entire plot of land, and therefore, of everything that is built on it. This means that there is no physical, legal division of "your house" and "my house"; legally, everything belongs to both equally.

What happens if over time owner 1 has invested money in the maintenance and improvement of his house while owner 2 has allowed his house to deteriorate? Well, the second owner owns 50% of the improvements of the second owner and the first owner also owns 50% of the depreciation of the second house.

Problems Arising from Joint Ownership

This type of co-ownership can give rise to a number of conflicts. From the difficulty to dissolve the joint ownership to the legal and fiscal problems that derive from this situation, which we have described in detail in several previous articles and posts that we invite you to read.

In a previous article we already talked about Joint Ownership, its boom during the last years and how it should be carried out to protect your investment and how to minimize the legal, economic and even coexistence risks.

Complicated Sales and Valuations

If one of the owners decides to sell his share, he faces the arduous task of finding someone willing to buy a percentage of two houses, which invariably leads to a depreciation of the value of the property and complicates the sale.

For example, when Valido Home advises on the purchase of a property through public auction, if what is being auctioned is a 50% joint ownership, we discard it directly regardless of the price. Who wants to pay hundreds of thousands of euros for something they do not really own?

Consequences of Death and Inheritance

In the unfortunate event of death of one of the co-owners, his heirs will receive a share of the property which may include usufruct rights and undivided shares, further complicating the legal and administrative situation of the property.

Disagreements between Owners

Personal conflicts can escalate to unsuspected levels, affecting the coexistence and enjoyment of the property in ways that no one would want to experience. Worst of all, if the relationship deteriorates, the sale becomes impossible.

Financing: A Mission Almost Impossible

Obtaining financing to build on a shared parcel is another hurdle, as lenders are rarely willing to accept an undivided half of a property as collateral.

Foreclosures and Auctions

Finally, the risk of foreclosure on a co-owner's undivided share may end up with an outside third party, possibly an investor specializing in these situations, becoming your new "neighbor" against your will.

Conclusion

Buying a half-owned plot and building two separate villas is an operation that may seem economical at first, but is fraught with risks and complications. At Valido Home, our advice is to always look for alternatives that ensure legal clarity and economic independence. Before making a decision of this magnitude, consider the potential long-term problems and consult with experts who can offer you a solid and secure real estate investment strategy.

However, if you are contemplating the purchase of a property or would like more information on how to avoid these and other real estate pitfalls, contact Valido Home. Our experts are here to help you build your future on a solid and reliable foundation.