Rising housing costs are causing home buyers in Ontario and across Canada to turn to unconventional ownership strategies; among the most intriguing of them is co-buying, which involves purchasing a home jointly with friends or relatives. Co-buying arrangements allow young families to pool resources and buy together, saving money or purchasing higher quality homes in better neighbourhoods than they could afford separately.
Co-buyers tend to view the relationship like a business partnership. Many execute partnership agreements or joint venture agreements before the home is purchased. The agreement will typically cover the contributions the parties will make toward the purchase and maintenance of the property as well as contingencies such as what will happen if one of the couples divorces, one of the parties dies or a party wants to sell their interest.
If the arrangement is unbalanced, and one co-buyer is paying more than the other toward the down payment or other costs, the agreement should be clear about reimbursement. Typically, at a minimum, up-front costs should be balanced from sale proceeds when the house is sold.
While a partnership or joint venture agreement may be useful or advisable in a co-buying situation, the parties must also be candid and trust one another. Financing for co-buyers may be more complex than in a traditional arrangement, but some financial institutions offer products like mixer mortgages where the parties can get different terms to reflect differences in credit worthiness.
The names of both parties should be on the title to the property to avoid potential problems later. An attorney with experience in residential real estate law may be able to help individuals prepare to co-buy a home by interviewing the parties involved and drafting a partnership or joint venture agreement outlining their rights and obligations. An attorney may be able to assist during the purchase or sale of the property or if conflict arises while the home is jointly owned.
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