Sequential Co-ownership

Before diving into what Sequential Co-ownership is, it’s important to first understand why it was created in the first place.

If you’ve been following along, you may have already come across a term called the five-year rule—a widely accepted real estate principle. But where did this rule come from? And why does it exist?

To break it down, we need to explore a fundamental challenge in real estate transactions: counterparty risk.

The Five-Year Rule and the Cost of Counterparty Risk

At its core, counterparty risk is the risk associated with the party on the other side of a transaction. In real estate, the buyer and seller are the two counterparties, and they naturally have opposing incentives:

• Sellers want to get the highest price with the least effort.

• Buyers want to pay the lowest price while getting as many concessions as possible.

This fundamental tension makes real estate transactions complicated, costly, and time-consuming. From price negotiations to inspections to closing costs, much of the home buying and selling process is designed to manage counterparty risk—and those costs add up.

Because of this, the industry has long advised buyers to stay in their homes for at least five years to offset the expenses of buying and selling.

But what if there was another way?

Introducing Sequential Co-Ownership

Sequential Co-Ownership is a new way to own a home that allows multiple people to gradually take turns owning the same property over time—without the high costs and inefficiencies of traditional buying and selling.

What Sequential Co-ownerhip looks like

1. Instead of a single person buying a home outright, ownership is structured in a way that allows multiple buyers to take turns over the years.

2. Each owner lives in the home for as long as they need—whether that’s one year, three years, or longer.

3. When an owner is ready to move, their share in the home is recorded while ownership is transferred to the next participant, who takes over the financial responsibilities and continues building equity.

4. This cycle continues until the home reaches a final sale point, at which time all previous owners share in the profits based on their ownership duration and contributions.

How Does It Actually Work?

To make this system structured, fair, and legally sound, Sequential Co-Ownership is built on four key components:

1️⃣ Equity Sharing Agreement – Defines the rules and the terms that all co-owners agree to. 2️⃣ Assumptions and Obligations Release Form – Ensures each participant is part of a cohesive team rather than acting as independent buyers and sellers. 3️⃣ Performance Lien – Protects all participants, preventing anyone from unfairly walking away with the home at the expense of others. (For more on this, check out our section on Liens and Mortgages.) 4️⃣ Assumable Mortgage – Allows ownership to seamlessly transfer from one participant to the next without the complexities of traditional home financing.

Together, these four components ensure that each Sequential Co-Owner can confidently invest in their home without unnecessary financial risks.

What’s Next?

This is the foundation of Sequential Co-Ownership—a system designed to make homeownership more accessible and flexible.

If this has sparked your curiosity, the next sections will dive deeper into each of these components, explaining how they work in practice. Or, if you’re ready to move forward, feel free to skip ahead to explore why Co-Ownership might be the right choice for you and the key benefits it offers.

Whichever path you choose, we’re excited to share how this innovative approach is reshaping the future of homeownership. 🚀