Asset Sharing TIpsSharing Law: 5 Helpful Tips

In the course of blogging about Cottage Food Laws, I came into contact with an excellent non-profit organization called the Sustainable Economies Law Center. Among the wide variety of different projects the SELC engages in, one of the most interesting, which relates directly to the notion of a sustainable economy, is referred to as "Sharing Law."  (In fact, if you read the article linked above, the director of the SELC Janelle Orsi, is becoming somewhat of an expert in the field, and is the author of many articles and at least one book on the matter.)

I first wrote about Sharing Law in terms of the new car insurance law passed recently in Washington.

Because the concept of sharing resources is becoming increasingly popular and possible, here are some tips to keep in mind when entering into your own sharing arrangement:

  1. Have a detailed agreement in writing-- think of your arrangement as a contract. You want to set out the parameters in writing. An old adage in Contract Law is that an oral contract is as good as the paper it is written on. General terms include things such as who will own how much of the asset? How are decisions regarding the asset to be determined?, etc.
  2. Agree in advance whether and under what circumstances new parties may join-- This is probably more likely to be the case in scenarios where a larger asset is purchased, and each of the initially agreeing parties seldomly use it. For example, if you buy an RV or vacation home with 3 other people and due to work constraints nobody uses it more than once or twice a year, can a friend of a friend buy into your sharing agreement? On what terms?
  3. Decide how maintenance and repair costs will be handled-- if something happens to the asset, who is responsible for it? Is it the person who was using it when it was damaged? Who decides which vendor to use? Will you set up a separate maintenance account to pay for routine repairs (e.g. oil change, new tires or new paint, carpeting, landscaping etc.)?
  4. Get insurance--whatever the subject of the agreement is, make sure it is insured. This can help minimize potential conflicts, and also ensure that your investment is protected. Also, be sure to check your state laws regarding who may carry the policy, whether each individual needs to get separate policies, etc.
  5. Consider the worst case scenario-- detail what will happen in the worst case scenarios. What if someone wants to leave the arrangement? Can they sell their share? To whom? Do others have to approve? What if they cannot find a buyer? What if someone passes away, can they assign their share to their beneficiaries?

Of course there are many other issues to take into consideration, particularly depending on the unique circumstances of your arrangement. Consult an experienced attorney to find out how to better structure your arrangement, and find out about any necessary forms you may have to file with the state or other legal entity, or other issues you may not be aware of.

Because it is such a new and emerging area of the law, Sharing Lawyers are not yet common. Therefore, the closest alternative is a Small Business Attorney or Contract Lawyer. These types of attorneys can help advise you as you contemplate a sharing arrangement for a vacation home, RV, car, co-housing agreement, or whatever the case may be.