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
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, s
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:
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!
Several years ago my sister in law’s uncle had a lake house not far from where my family lives. He had cancer and the property wasn’t maintained because he didn’t have the energy to deal with it while undergoing treatment. After he passed my husband and his brother discussed the possibility of partnering up and purchasing the property from his children. The price was too steep so we opted not to buy. In hindsight, I think it’s a good thing we didn’t enter this partnership with my husband’s brother. I think it would’ve been more trouble than it’s worth.
I think you’re probably right. While I’m sure it can work for some, it is definitely very challenging!
Amy – thanks for sharing this story. We own a mountain cabin and even though we don’t share ownership with family members we do have family members who like to use it. They treat things differently than we do which results in some friction. They also like to repay us by buying us decor items that aren’t really our taste. I would prefer they help with the electric bills. But of course paying for electricity isn’t as fun as buying tchotchkies and gewgaws.
Sounds like an extremely difficult decision to sell. We’re struggling with that now as well. Probably need more wine, beer, and tears before we make up our minds.
I’m glad the post may be useful for you. Hopefully, the resources I shared can help you out a good deal. No one needs more tchotchkies. 😉
Best of luck on your decision making…cheers!
Great post. I have this lovely rose-tinted glasses idea about buying a holiday home with family but my husband always warns against it. I know in my heart of hearts he’s right. I think it takes a lot to make it work.
We all wear those glass at some point don’t we? Yes, it takes a lot of work. Try and remember this post if you start thinking that way again. Thanks for stopping by.
This is really relatable to our family. Several years ago my parents used inheritance money from their parents to purchase a lake condo. My two brothers and I agreed to chip in with the monthly payments and have been doing so for the past 7 years. So far everything has gone really well though I do wonder what will happen if someone loses interest, can’t make the yearly payment, or if my parents pass away.
Setting ground rules up front was really important and has resulted in minimal disputes so far. The condo is used almost every weekend during the summer and we have created a lot of great memories down there.
So glad to hear it’s gone well so far FP and that you’ve got some ground rules to help keep everyone on track.
My husband had to keep reminding himself for a while that the memories would remain with him, even if the cottage didn’t. Keep making great memories!
So true.. Have now owned the property but have shared with family when renting cabins.. it gets to be to much.. nice article
Thanks, Linda. Yes, even renting a place with others can be trying sometimes.
We love our family cottage, but we almost lost it because it was a family cottage. Best thing we ever did was buy everyone else out. Although the idea seems counter intuitive. I am not going to leave the cottage to ‘my children’. I will pick one child to own completely that I think will be fair in all matters to everyone else. Too many cooks in the kitchen ruins the soup. I actually think a benevolent dictator is better than a democratic rabble on this issue.
I remembered after this published this morning that you had a cottage from your wife’s parents. I’m glad you were able to buy out the rest of the family. I’m sure your boys will love growing up there and cherish the memories made.
Yes, too much ruined soup out there.
Wow, so much to consider! I have not been in this situation, not sure if I will be in the future, but I will always remember this post! Thanks for sharing and offering your pearls of wisdom.
Thanks, Candi. I hope if you ever do come into this situation it goes well for you!
This is an excellent article! Your list of considerations is comprehensive & spot on! I have saved this article.
Thanks so much, Diane. I hope the resources help you out as needed.
This is something that a lot of people have to think about. It saddens me when having to split money or things among family causes hurt feelings, anger, and even distance. Your advice and suggestions are super helpful and having a list of things to consider makes this kind of thing easier. I enjoyed reading your “story” too. : )
We enjoyed summers at my grandparents’ lake cottage for many years. Although my grandparents have long passed away, the cottage is still a fixture in our lives. Less so now, though, as my parents started going to a different piece of property they owned in another state. Although my uncle owns the cottage now, he still makes it available for other family members to use. Not everyone has the same standards when it comes to cleaning up after themselves, though. I have wonderful childhood memories, but I wouldn’t try to co-own a property with anyone.
We owned a different family home with my husband’s brother & his wife that we initially rented out. My husband & I later moved into the home, but when my brother-in-law & sister-in-law got a divorce, that caused a huge problem for us.
I’m glad you were able to sell to someone who already was a part of that little community.
It’s too difficult to get a group to agree on maintenance or repair expenses. Often someone bows out and the rest pick up his or her share because there’s no avoiding it. If your septic system stops working you have little choice.
Thanks, Mrs. G. Exactly, and that’s what we were afraid of. We’ll miss the lake but not the grief.
My current home was purchased from three cousins (all married with children) who had inherited the property from a father/uncle. They jointly owned it for numerous years, but the upkeep was largely the burden of one owner and the others went along for the ride. It finally came to a head over purchasing a new couch (if this was the straw, you can only imagine the tension before).
I also have the experience of a cabin in the ADKs that was in the family for 70 years (and where I got married). My father eventually had to sell it during retirement due to rising taxes and brutal winters. Though my brother and I were devastated, it was for the best. I often think nostalgia trumps logic in many of these situations, but I never would have said that until it happened to me!
Hope you make many new, happy memories this summer!
As heart wrenching as it was to ultimately decide to sell, it sounds like you absolutely made the right decision. So many good memories there, and I’m glad they didn’t have to be spoiled by years of tug of war between you now.
Thanks for sharing.
A few years ago, my in-laws went through this. My father-in-laws parents had retired to a small trailer on a river up north. It wasn’t worth much, but it still created some issues after they both passed and it was split equally between eight siblings. Yep, eight.
Eventually, there were a few of the siblings that were either or both better off and/or really didn’t have occasion to ever use the place, and they all agreed to sign over their shares to the three siblings that did use it quite regularly. There might still be drama but it definitely took a good portion of it away with that solution.
I saw the headline and knew it had to be a Michigander. Never heard a cabin called a cottage anywhere else. Some call it a camp, too, which is even stranger to me.
Families can be torn apart by the inequality in use, care, and costs of a shared place. It’s not a good situation.
Cheers!
-PoF
Hi Amy,
Shared ownership (or just shared responsibility) of a vacation property definitely comes with its upsides and downsides. My wife’s grandfather owned a vacation property and had four kids. All four of his kids grew up going to the vacation property most weekends in the summer. As his kids had kids, the next generation got used to going up there most summer weekends.
However, as her grandfather got older and needed to go into assisted living, he continued to own the property and let his kids and grandchildren use the property. The one thing was that whoever came up needed to help maintain the property. I think you can see where this is going, a vacation house requires a good deal of upkeep. And each family that went up felt that the other families weren’t keeping up their end of the bargain. This caused a good amount of hurt feelings and discord until he finally sold the property.
While sad to see it sold and no longer have use of it, it is much nicer not having to deal with the family drama it caused.
There was a family cabin, where of my grandparents generation, 3 siblings agreed to share the property and each had a cabin. Only each also had several kids (my dad is 1 of 5). Eventually they decided the best plan was to move the cabin on, to a cousin. But for the legal sale etc, it took several years of legal back and forth with the other cousin whose dad’s name was on the title for the land.
It was so unpleasant my dad tried to give his half of another cabin to my siblings and I, instead of waiting for us to inherit it. Because neither of them did a good job of paying me back for small purchases, I did not want to be legally bound, if they didn’t have their part of the property taxes, etc.
Mom negotiated to buy out dad’s half and it’s been her summer retirement location.
Part of my concern for the future is my sister’s nostalgia for it. She was very resistant to changing one if the rooms to make it functional for mom, vs when we visited maybe 3x a year. The other draw back is I’ve helped mom with some renovations, but my siblings havent. Will they be willing to put in the sweat equity in the future? TBD.
I can imagine how difficult of a decision it was for you to sell , and it sounds like in the end it was a good choice.