Once you have done the work of determining your legal rights and responsibilities, financial obligations, and future scenarios as a group, we recommend finding a lawyer who has some experience drafting co-ownership agreements.
It is essential that your agreement is created with all members of your purchasing group and the contents of any wills or spousal agreements are shared with your lawyer as they prepare your group’s Legal Agreement, so that they align.
It might feel intimate to share your will with your co-purchasing group, especially if this is a new relationship, but this transparency will allow you to create legal agreements and adequately address the future of your home together.
To summarise this section, here are some frequently asked questions that Ryan often hears while working with co-ownership groups.
If I’m buying a property with family, do I need a purchasing group agreement?
A legal agreement is always recommended even in the most trusting relationships. With families, the agreement can state each group members % of ownership. If the family members of a purchasing group have children, an agreement provides clarity of each child’s share.
How can we ensure that the members of a purchasing group maintain control of who buys next if one member exits the agreement?
The legal agreement needs to be a tenants-in-common agreement and clearly state what happens upon the exit of one member. It should define at minimum:
approval rights, such as right of first refusal, for selecting new members of a purchasing group
who has obligation to find new member (usually the exiting member)
time allowed for the transition
details of required process (e.g. use of registered realtor)
If we buy as a couple, and one of us wants to leave, how do we get our money out of a co-owned real estate purchase?
The home will be considered a ‘matrimonial home’. This asset will be divided like other joint assets of the marriage. Married couples may be part of a purchasing group, and it is better to enter into a tenants-in-common agreement as individuals, not as a couple, in case of such events. These rights can also be covered off in a marriage contract.
What are the advantages of a ‘tenants in common’ agreement?
We can be very specific about exactly how a member’s share of a property can be handled in all circumstances: death, divorce and default. It is the agreement that should be used in co-ownership real estate purchases.
What are the circumstances you would choose ‘joint tenants’?
This agreement works with uncomplicated, close personal relationships, like siblings, that are comfortable with joint ownership. When one partner dies, the remaining members of a purchasing group inherit the share. It doesn’t have to go to an estate.
How can we avoid a member’s ‘estate’ inheriting the share of the house?
Make sure that you have a tenants-in common agreement and it is very specific about what happens to this portion of the property especially the rights of first refusal regarding members.
Other questions your lawyer will need answered:
What are the names of everyone on the title of the property?
Will anyone use the property who is not on title?
Is any portion of the property used for anything other than normal home use i.e. business, art studio, etc.
That’s the end of step 4. Coming soon is Step 5: Finding Your Perfect Property - the final step in the process of a co-ownership real estate purchase!
How Do You Create Your Legal Agreement?
Click on the sections below to learn more.
Finding A Lawyer and Frequently Asked Questions
What are all the Steps to Becoming a Co-owner?
Click on the links below for all the blog articles related to each step.
“Your purchasing group’s Legal Agreement should be written with the mindset of a will: think of all contingencies and address remedies that make sense over the next 5 years. Many wills are revisited after that timeframe.”
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