Recently, we published a post on Women Who Money that dove into the topic of purchasing a vacation property. It discusses the types of vacation properties, types of investors, the pros and cons of vacation homes, and other considerations.

What we didn’t discuss, and what I’m diving into today is buying or owning (via inheritance) a vacation property with others.

First my story, if you want to skip it and get to the how-to-do-it successfully resources, just scroll down a bit and you’ll find it after the picture of the swans.

The Cottage

My first visit to the cottage was mid-summer 2011. It was also the first time I met my future mother-in-law, and I was instantly charmed by both her and the tiny lake house.

Nestled between two other identical cottages on a quiet lake in lower Michigan it was a short drive to visit, but it could make you feel a million miles away.

My husband’s 1st birthday was celebrated there, and his family of 5 lived every summer of his childhood in the small 480 sq. ft. log cabin, complete with two bedrooms, a loft, living area, kitchen, and bathroom with a shower.

His parents’ continued to use the cottage every summer when they returned to Michigan from Florida after retiring. And following his father’s passing in 2001, John’s mom still spent her summers there.

We celebrated her 84th and final birthday at the cottage too. She passed away just 54 days later at the end of October 2013. She was a tiny little thing, the oldest in a family of 10, feisty, funny, and a no-nonsense kind of girl.

While the cottage was technically in John and his brother’s name since 1998, it was “mom’s cottage”. Until of course, she wasn’t here anymore.

Trying to Share

The cottage was closed for the winter when my mother-in-law passed, but after the spring opening in 2014, it wasn’t long before issues began.

It’s TOUGH sharing a vacation property with others.

Especially a cozy cottage. It quickly feels cramped – like too many growing puppies in a basket but nowhere near as cute – even when you aren’t all there at the same time.

No matter how well you get along (or not) before the joint ownership, things change once the sharing begins. And the dynamics change even more when additional outside influences come about.

Spouses, children, perhaps even grandchildren, friends, and other family members who also want a piece of the pie so to speak, muddy the waters. (Including me and mine too.)

We all want to use it, let others use it, sell it, maybe rent it, or perhaps merely voice an opinion on a property we do or may someday have a stake of ownership in.

It can make cottage life anything but relaxing if you let it. Unfortunately, we let it a time or two, or ten.

John and I, as well as some of our other family and friends, spent a lot of time at the cottage in the first two summers. We loved sitting on the waterside deck, kayaking, or pedaling around the lake.

Issues arose, we worked through them, but some tensions lingered.

During the 2nd summer (2015) John asked his brother if we could buy them out, as they didn’t spend much time there, but they declined.

Add a couple of years, more family drama unrelated to the cottage, and changing priorities, and in the spring of 2018, John’s brother informed him he was ready to sell his half of the cabin.

Leaving us with three choices – 1) buy him out, 2) let someone else buy his share, or 3) sell our half too.

Not. An. Easy. Decision.

I think you can guess option #2 took all of 1 minute to cross out.

Two or three years prior and we would have jumped at the chance to own the cottage fully. And we almost did this time. But too many things had changed since we initially asked John’s brother if we could purchase his share.

We’d invested in another property, bought a vacation/future retirement home in Florida, and I’d left the cubicle.

We also knew in our hearts it wasn’t the best property for us due to other factors unique to it.

It’s one of four cottages initially built by one property owner. Who then sold each one off to others.

The first three cottages were bought by three different families over 50 years ago – John’s parents purchasing the second one after spending time at the lake with friends who purchased the first.

While there has been some change of hands in the 1st, 3rd, and 4th cottages, due to deaths or a sale, they are owned today by friends or family somehow related to the original three initial cottage purchasers.

While each cabin has its own lake frontage, deck, and dock, all four cottages share a driveway, well, and septic system.

So, while we would own our cottage, we would still be sharing significant items. Without written agreements we were concerned issues could arise from a whole bunch of things including when major systems needed repair or other cottages changed hands.

After weighing all the factors over many weeks, a few bottles of wine and beer, lots of conversations, and quite a few tears, we chose to sell.

Fortunately, the cottage was bought by one of the neighboring cottage owners and was closed on at the end of 2018, saving us from having to put it on the public market.

Unfortunately, the whole situation still sucked.

Mixing family and business is difficult. Can it be done successfully? Yes. But it sure as heck isn’t always easy.

When Considering Buying a Vacation Property with Others or Just Inheriting One

Establish all the ground rules as soon as possible. Nothing is too big or too small. From who gets to use it when, to who pays for what and when, to what to do if someone wants out.

Some suggest establishing a written formal “cottage agreement” others recommend creating a trust or an LLC. Do your own homework to determine what is right for you. There are many things you’ll want to consider. This list below should give you a good start.

• If the property is used seasonally who is responsible for the opening and closing? Will you share responsibility equally or rotate responsibility?
• Who will take care of routine maintenance and repairs if something breaks?
• Who acts as treasurer or has access to the bank account and handles collecting funds from others and paying the utilities, insurance, taxes, etc.?
• How will you budget for ongoing expenses or major updates?
• Are contributions for expenses collected monthly or annually?
• Will you hold a cushion or emergency fund for major emergency repairs?
• Will ongoing costs be split equally, or shared in proportion to usage?
• Who gets to use the cottage—owners only, other family members of owners, friends? Must an owner be present?
• Will all owners have use of the cottage all at the same time?
• Is it a free-for-all (anybody can come up at any time) or does one owner get June, another July, and another August?
• How might holidays or prime time be shared or allocated?
• Can owners bring additional guests, or lend out the cottage to others?
• Can the cottage be rented? If so is the revenue shared equally?
• How will decisions be made for any decor changes, remodeling updates, or other improvements?
• If one owner wants an upgrade must the others agree? Unanimously or does a majority rule? How will it be paid for?
• If the request for update or improvement is declined can the requesting owner still complete it at their own expense?
• Will ownership automatically pass to a surviving spouse or children?
• How will you handle other ownership transfers?
• Will existing owners have rights of first refusal when an owner wants to sell?

Check out these articles for further considerations and advice:

• How to buy and share a vacation home with friends or family
• Keys To Making Family Property Ownership Stress-Free

If a Vacation Property is Already In The Family

Do you currently own a cottage, beach house, ski cabin, or other vacation property you want to pass on to your children someday?

Then please do them a favor and discuss all the options ahead of time. You can hope your family will keep the cottage in the family or “work things out” fairly amongst themselves, but sadly that often isn’t the case.

These articles have advice for passing down a family cottage:

• How to pass on the family cottage without destroying your family in the process
• Sharing the Family Cottage

This book may also prove helpful:

• Saving the Family Cottage: A Guide to Succession Planning for Your Cottage, Cabin, Camp or Vacation Home

A Key to Success?

This online website I found may solve a few headaches for everyone – SharedKey.com (no affiliate relationship) – is “Making Shared Property Easy”.

Founded by two brothers who share a vacation property in the Canadian Rockies with their parents and two other siblings, SharedKey strives to help others manage their properties better.

For just $49 a year per property (30 day free trial) SharedKey provides all members with a:

• Photo Gallery
• Calendar
• Map & Directions
• Local Guide
• House Info for instructions and rules
• Key Contact info
• Communication Board
• Guest Book
• Member & Guest Management levels

For those with multiple owners sharing a property, I think this would be very helpful. If we still shared a property I’d definitely look at SharedKey.

Final Thoughts

As much as you might love your cottage or second home you can’t be sure others feel the same. Even siblings or children.

While formal agreements, LLCs or trusts, may feel like overkill, I highly recommend you consider them. While they’ll cost you something to establish, they can help save your relationships and potentially more money in the end.

Now, since we’ll be missing the cottage greatly this summer I better go start planning other places to kayak.

Do you have a cottage story to tell? Any advice for others on what works or what to avoid? Please let us know in the comments!