I went to a baby shower a few weeks ago; there, a lady was telling me about a home she purchased earlier that year. Her and her husband bought the home together with another couple. The four of them live in the house together, with a contract drawn up and signed to sort out any potential future issues such as: disagreements, maintenance, break ups, sharing the mortgage, dividing the use of space and any other issue that they could foresee arising out of this type of arrangement.
That idea didn’t sound absurd to me and it was interesting to listen to her story as I have often wondered if people were doing this – buying a property in BC with someone else, to afford it.
Many situations can arise when the investment decision to buy with someone else could go completely wrong, especially when you all live in it. But I support and encourage those that are thinking creatively on how to combat the expensive BC housing market and create their own solutions.
I even have my own story where I bought an investment property in the Okanagan with my parents; I own 99% of the home and they own the other 1%. A contract of intent, splitting profits, maintenance, and how we will rent out the suites was drafted, reviewed, dated and signed by all parties.
The best approach, in my opinion, is to look for a house that already has a separate legal suite or coach home on the property. The renovation process can be an incredibly stressful situation (plan to budget approx. $70K to $120K for a basement suite); it takes a lot of time and energy to endure such a large project. TV renovation shows make it look easy!
he absolute most crucial step to execute when purchasing a home with friends or family: schedule an appointment with a real estate lawyer to draft a co-ownership agreement. This is paramount and should never be skipped. I spoke with 3 different real estate lawyers: Andrew McIntosh (New Westminster), Jamie Nay (Maple Ridge), and Ewan MacLeod (Langley) to gain a better idea of cost; the average price of a co-ownership agreement is about $1,100 to $1,500.
Do not sit there for even a moment and think over this price, it is an incredibly small fee to pay and should be an automatic fee that you have in your budget when you are buying with another party. The cost in legal fees if you do not have an agreement can easily be $15,000. Something as simple as a break up, can result in legal fees for everyone, as one person wants to be bought out of their percentage of ownership. Or maybe one couple grows their family and needs more space, so they need to move out. The situations are endless, and you do not want to find yourself in one without having a legally drafted and binding co-ownership agreement.
I hope this helps anyone that has considered purchasing land or a home with another party. For further contact details with real estate lawyers in your area, please contact me at firstname.lastname@example.org