"What is the contractual arrangement between the parties?"Īny agreement should also specify the percentage each person has, which - if you aren't splitting ownership equally - Bell suggests could be calculated based on factors such as square footage and livability differences between each unit, assuming there are separate spaces. "When you're doing contracts, you're always trying to ask what scenarios can arise and what do you do if things go wrong?" says Bell. What if someone wants to rent out their place? What happens when one person wants to sell? These are the types of questions you should review with potential co-owners and attempt to answer in any co-ownership agreement. So if one buyer defaults or forgets to make a payment, everyone's credit scores will be negatively impacted. Barsoum points out that from a lender's standpoint, every co-owner is 100 per cent liable for the mortgage. Whether registering as joint tenants or tenants-in-common, all owners on the title will need to sign any mortgage, and there can only be one lender, notes Bell. In a tenants-in-common arrangement, each tenant owns a portion of the property, which becomes part of their estate when they die. For an estate owned by more than one person, however, a tenant is a co-owner.) With joint tenancy, each person has an interest in the investment, and if one owner dies their share of the home goes to the other owner(s).
(Usually, the term tenant describes a person who rents or leases property. You can co-own a home as joint tenants (similar to a married couple buying a home together) or tenants-in-common. If you're interested in the idea, here's what to consider before buying property with a friend or two. We reached out to Dalia Barsoum, president of Woodbridge, Ont.-based Streetwise Mortgages, and Richard Bell, partner at Bell Alliance LLP in Vancouver, to find out how a co-ownership arrangement might differ from a typical purchase. But if living with family can be complicated, co-buying with an unrelated party (a friend, for example) is even more complex and could benefit from expert guidance. It's no wonder some Canadians are considering co-ownership to get into the market or move into a more desirable property or location. According to a recent Canadian Real Estate Association report, homes in Canada sold for an average of almost $539,000 in June, and of course much more in cities like Toronto and Vancouver. And despite the early impact of COVID-19 on housing values, prices bounced back in May and June and remain relatively high. On July 1, the Canada Mortgage and Housing Corp (CMHC) changed the rules around mortgage insurance, making it more difficult for some would-be buyers to qualify for a CMHC-backed loan.
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