Dreaming of that fabulous waterfront estate but haven't won the lottery yet? Are you able to afford the mortgage but don't enough for the downpayment? Or have the new mortgage financing rules pushed homeownership just out of reach?
Partnering with friends or family in a co-ownership agreement could help your home ownership dreams come true. The added purchasing power can bring many properties into reach that would otherwise be unobtainable. And sharing the costs of maintaining the property can make it easier on the pocketbook, especially for a vacation property where each party is only there part-time.
However, having multiple owners with potentially different goals, financial resources and changing life needs can create difficult situations and tension between all parties.
Before starting to look at properties, its' important for everyone considering the partnership to discuss their wants, must haves and real estate goals in order to be in agreement of the type of property that they want to purchase. Having more people in the mix means having more opinions and tastes to satisfy, and making sure that everyone's vision of the ideal property is aligned prior to starting search will make finding the perfect place easier and smoother for everyone involved.
The next step is to work with a lawyer to create a co-ownership agreement to clearly set out the obligations and rights of each owner. Having a well-drafted agreement can help ensure a smooth long-term partnership.
BCREA recommends including the following provisions in Co-ownership Agreements:
- How ownership of the property will be registered on title to the property;
- What percentage interest in the property each party holds;
- The initial capital contributions of each party;
- How mortgages will be handled and paid;
- How the property will be used, for example as a rental, for owners use, etc.;
- How will expenses be allocated between the parties;
- What happens if someone doesn't pay their portion of the expenses;
- What happens if a co-owner passes away, loses capacity, divorces, or becomes bankrupt;
- Do co-owners have the right to purchase each other's interest, and if so, what are the mechanisms for this;
- What happens if a co-owner is in default of their obligations under the agreements;
- How are disputes going to be resolved; and
- When and how can the property be listed and sold.
- In addition to the items noted above, co-ownership agreements may also address the renovation or redevelopment of the property, equalization payments if one co-owner has exclusive use of the property, responsibility for maintenance and landscaping, etc.
Once the co-ownership agreement has been entered into, you're ready to start your home search with your local real estate agent to find a property that meets the needs of the group. The team at York and Associates is here to ensure you get the professional advice and market expertise you need when buying properties on the Sunshine Coast. Call us today at 604-817-7173 to get started.