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Co-ownership Wanted, Looking for a buying mate?

24 November 2016
LINDSAY WRIGHT

Co-ownership Wanted

Looking for a buying mate?

Get used to seeing these kinds of advertisements in your local newspaper. As Toronto real estate begins to climb, more and more eager homebuyers are finding it harder to go solo on a mortgage.

As the real estate prices in Toronto continue to rise, many first-time homebuyers are being squeezed out of the market, unable to save for a large down payment or even qualify for today’s average mortgage in Toronto. So some have found clever ways around this situation in order to achieve their home-buying goals, and that goal includes someone else.

We’ve all heard it, “co-ownership is increasing” quoted by Larry Cerqua, President of the Toronto Real Estate Board. So to get around this booming real estate craze, siblings, friends, family members, even strangers, are pooling their finances together for shared ownership.

If you haven’t heard about this growing trend, here’s how it works. Each person is on the property title, and everyone lives either together or in separate units, but all under one happy roof. The legal term for this? “Tenants in common.”

If you were wondering if this is actually a trend, then you’d be surprised to know there are plenty of families in the GTA who already have purchased homes together and have admitted their ups and downs.

While shared co-ownership sounds like a genius idea, there are some challenges to co-owning a home together. For one instance, buyers may have a difficult time finding someone who is ready to buy at the same time or who has financial equity, similar values and mutual trust. Unlike married couples or common-law partners who own equal tenancy; co-owners can hold unequal shares in a property, with the option of selling their share to a third party.

And don’t forget about the paperwork. A partnership or joint venture agreement covers who pays for the purchase, the maintenance of the home and how the property is divided if one of the co-owners decides to separate or if one, well, dies.

Now these are just some of the formalities. But with all big decisions, especially joint purchases, many co-owners stress the need to have a very open and honest chat about each party’s financial situations.

Creating a plan for all potential scenarios is a great way to figure out whether or not the co-owner is right for you. Scenarios such as if one person wants out, how long you both are committed for, and if any other circumstances change, all need to be hashed out. After all, this is the biggest purchase of your life, and theirs too.

If co-buying a home seems a little daunting, many young adults have resorted to something a little smaller. More millennials are now splitting the costs of condo purchases. The prices of a two-bedroom condo in the city are still somewhat reasonably priced and have less bidding wars. Also, less maintenance on the property and fees can make it easier to decide when someone wants out.

So like all big relationships in life, it’s best to get to know the person or people you’re about to get into bed with before it becomes legal.

Of course, everyone’s situation is different, and until we can figure out when this Toronto real estate race will slow down, this is one way of buying yours and someone else’s dream home on a budget.

If you currently co-own a home, please share your experiences with us.