Ontario Government Encouraging Co-Ownership Of Homes

If you’re tired of renting but can’t quite scrape together a down payment for a home of your own; or if you are retiring and would like to keep your living costs as low as possible; you may need to get creative. One option is to purchase a home with friends or relatives, entering into something called ‘Co-ownership’.

Late last year, the Ford government released a consumer guide aimed at encouraging buyers to consider co-ownership as a way to make home ownership more affordable as well as to alleviate the housing supply crisis. The government defines co-ownership as follows:

“Co-ownership housing is a shared living arrangement where two or more people own and live in a home together. Co-owners may share living spaces like kitchens and living rooms, or the home may be divided into separate units. Responsibilities for care and upkeep of the home are usually shared, as well as some amenities and services.”

While there are obvious financial advantages to co-ownership, the arrangements can be complicated and need to be sorted through carefully. For example, there are multiple options for sharing ownership, including:

  1. Shared ownership as a group of individuals, either as joint tenants or tenants-in-common. In the former case, if one owner dies, the other owners automatically inherit the deceased’s share of the property; in the latter, the deceased’s share becomes part of their estate. The ownership shares may be equal, or may be different, for example depending on how much each owner contributes to  the purchase. Also, a process for decision making and dispute resolution needs to be worked out, for example, what happens if one owner wants to sell and the others don’t? How to manage maintenance and improvement costs also needs to be clearly defined. It is essential to work out all of these issues before the property is purchased, otherwise, there could be a lot of unnecessary conflict and hard feelings down the road. The result is a contract called a ‘co-ownership agreement’. A well-crafted co-ownership agreement can also be a great aid to getting financing approved.
  2. Set up a co-op corporation, where each owner has a defined share of ownership of the property, and these shares can be bought and sold. Co-ops have a long history and, while this approach is more complicated legally, there are lots of models for how to set one up properly, and it greatly simplifies the question of how one owner can sell without selling the entire property. The disadvantage, as with all co-ops, is that the owners are not listed on title, and this can make financing for a new owner more difficult.
  3. If the property has clearly defined units, as well as common areas, then a condominium corporation is a possibility. While setting up a condominium corporation is more complicated (and more expensive) than setting up a co-op, this approach has the advantage that each owner has registered title to his/her own unit and can therefore sell more easily. Like co-ops, condos are a well established form of property ownership.

With all of these options and complications, it’s obviously important to enlist legal help to advise as to the advantages and disadvantages of the different forms of ownership, as well as to prepare the necessary documents, such as the co-ownership agreement. Some careful forethought, sound decision making, and clear documentation can make co-ownership a great option for many prospective buyers.