Management & Expenses
Managing usage depends entirely on the method of allocating use. A Pay to Use method involves much more day to day management -perhaps even an outside management company needs to be employed- as usage fees and rental income must be collected, reservations managed, and records kept. If Usage Assignment is the method chosen, day to day management likely can be done by the co-owners with each co-owner assuming different responsibilities. In either method, detailed records of who occupies the property and at what time must be kept.
In Pay to Use allocations, the owners may want to outsource the management, including collection of payment and bill paying, to an outside country, This of course depends on the level of complexity of the Pay to Use allocation in practice. If the co-owners attempt to manage under a Pay to Use allocation, it is imperative that the group sets up a common bank account and that accounts receivable and payable are carefully managed. Each co-owner should have reasonable access to information regarding "who owes what and when" as the Pay to Use method only works if owners or renters are "paying to use it". If the property sits idle the co-owners may have to contribute additional funds to ensure all expenses are covered.
In Usage Assignment, managing finances is far simpler as the owners simply set up a common bank account and contribute fixed monthly payments to cover any recurring or accrued expenses. The payments are allocated based on percentage of ownership.
In either case, the owners should plan on accruing expenses to pay for the mortgage, property tax, homeowners insurance, utilities, and repairs. Two areas that are often problematic are high dollar repairs (new roof, foundation work, etc) and cleaning.
For high dollar repairs, inevitably the property will encounter an unexpected large scale repair or replacement. Rather than collect money "as needed" for these expenses, it is advisable that each co-owner contribute a fixed amount to a separate account to be used only for such emergencies. For example, a $50,000 roof needs to be replaced every 20 years. However, the cost divided by five owners over ten years is only around $80 per month.
As for cleaning, it is unlikely that any group of co-owners will have similar standards of what constitutes acceptable cleanliness. Rather than engage in what will be endless disputes about the proper way to leave the place, co-owners should engage a professional cleaning service to maintain the property on a regular basis.
Co-owners should draft an agreement that defines the process for making decisions and specifies how certain decisions are to be enacted. Management agreements only matter when an issue arises. When one does, the agreement needs to be strong enough such that it defines the outcome and leaves little room for dispute.
Co-owners needs to be careful about allocating too much power to any one individual. Common management decisions such as choosing maintenance and cleaning service providers should be addressed so all owners understand what is expected of them and what is considered a norm. For example, if a pipe bursts one owner may think its ok to try and save money by fixing it him/herself. Other owners may object and want a qualified plumber to fix the pipe. Examples like these drive the management agreement. The owners should define basic processes for management and execute them according to the agreed upon protocol. If objections or conflicts arise, the agreement should have voting and dispute resolution procedures to ensure each owner has a voice.