Why Choose Co-Ownership?
In Canada, real estate remains an excellent investment. The average Canadian home price has increased by more than 50% in each of the last two decades, and this rise is even more dramatic in urban centres like Toronto. While renting requires no down payment, it does not offer any equity, even after years of contribution.
The need for affordable, secure housing investments has never been greater, which is why co-ownership in real estate is a serious and viable option for many who want to invest in their home. There are many benefits to choosing co-ownership as a method of home ownership, however, there are some unique challenges that a co-owned real estate purchase can present.
The Benefits of Co-Ownership
Living Intentionally In Community
Many co-ownership real estate purchases are made to support extended families or to create alternative home environments that foster collective care and support. These arrangements re-image concepts of home in the belief that individuals, children, and families thrive in community and collective environments. These environments foster interdependency and help break cultures of isolation, allowing like-minded groups—friends, LGBTQ chosen families, artists, seniors, or people wanting to live more sustainably—to imagine and invest in futures together.
Retirement Alternatives
Many seniors are seeking alternatives to the loneliness and challenges of living alone, and the expenses of assisted living on a fixed income. Co-ownership can resolve isolation, create an opportunity for multi-generational living, and allow seniors the sense of security that comes from living in community and ageing-in-place with others.
Meeting Mutual Needs
Many purchasing groups form because members have compatible offerings in a co-owned real estate purchase and living situation. For example, many seniors own large homes but may have low incomes and live in isolation. Offering equity to younger couples or families is a solution that could solve many needs.
Building Equity
Investing in a co-ownership real estate purchase can be as valuable as in any other home purchase. For people who want to stop paying rent and instead build equity in their home, but cannot afford to enter the housing market on their own, co-ownership is an excellent opportunity. With thoughtful planning and due diligence, buyers can grow and redeem the value of this asset.
Affordability in Cities
Renting in many cities is becoming increasingly unaffordable to most. Co-ownership may be a more affordable way to remain living in urban areas.
Shared Resources
Living together as a group generally offers the prospect of mutual care, sharing resources and saving time. Your purchasing group might share child care, elder care, living assistance, or pet care. Gardening, cooking, driving and other skills and services might be shared, as well as assets like cars, bikes, toys and tools. The possibilities for sharing and increasing your collective standard of living are as expansive as your purchasing group would like them to be!
Potential Barriers To Co-Ownership
While many are interested in co-purchasing as a housing alternative, they can be discouraged or swayed by the obstacles (both real and perceived).
Risk
In today’s financial environment, co-ownership in real estate requires groups to take on the responsibility for a home as a whole, even though the expense is shared among multiple people. This perceived risk is a barrier to many, but we can help guide you through this challenge. Lesley Tenaglia has helped many groups navigate the nuances of managing risk as a group, and helped with many successful coowned real estate purchases.
Commitment
Committing to a co-ownership purchase may feel like a challenge when considering multiple future trajectories amongst a co-purchasing group, and uncontrollable unknowns or life changes. By using this guide, you and your group can create agreements for future potentialities, and generate a shared understanding of the level of commitment required for your co-purchase.
Perception of Legacy
In some cases, home ownership can be tied to a sense of family legacy. Many homeowners expect to be able to pass their home asset on to their children. However, in a co-purchasing arrangement, a purchasing group may design their agreements so that their home ownership remains with group members, rather than falling to other family members. Co-ownership in real estate poses a cultural shift towards an understanding that living spaces can simply be equity assets, and not a guaranteed inheritance. You can contribute to that cultural shift as a group.
Complexity
Even a group of adults confident in their co-purchasing group may find this process difficult. Assigning equity, developing house agreements, and creating legal contracts are all part of co-purchasing, and require detailed research and negotiation. It can feel daunting, but our team is here to guide you through these challenges. Lesli Gaynor has assisted many groups through the interpersonal complexities that may arise in this process.
Lack of Support and Services
In reality, there are limited services available to support co-purchasing. Financial options are limited—most banks will not lend to groups of adults with little relationship or no family connection—and few lawyers have experience with co-purchasing legal agreements. Ryan Martin’s law firm has assisted many groups with their co-purchasing legal agreements, and our team can help connect you with relevant support and services.
Zoning Laws
Many areas are still governed by antiquated zoning laws that obstruct co-purchasing. Some laws create obstacles for home conversion or others, known as old “rooming house” laws, don’t allow more than 2 or 3 adults to live together. Our team can help guide your group through these obstacles and point you towards resources to overcome these challenges.
What’s in The Ultimate Introduction to Purchasing Co-Owned Real Estate?
“Spaces and homes can be changed, but goodwill and family relationships are precious. Anyone thinking about co-ownership in real estate should consult a lawyer about legacy planning before buying anything.”
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