Vernon & Salmon Arm Real Estate Lawyers Advising on Co-Ownership

Given today’s ever-increasing real estate prices, it is becoming more common for people to share the purchase of a home with other adults who are not their spouse or partner. For single people, this can be an excellent way to enter the real estate market without the need to fund a purchase on their own. While owning a property with a friend or family member can be highly advantageous from a cost perspective, there are a number of risks and practical considerations that anyone contemplating this arrangement must consider.

The real estate lawyers at CM Lawyers have extensive experience drafting and reviewing co-ownership agreements and advising on co-ownership issues. We will review the particular circumstances of your situation and provide practical and straightforward advice on how best to structure an agreement that fully contemplates each party’s present and future interests. Our lawyers pride themselves on our open and honest approach with clients, ensuring they are thoroughly informed about all aspects of their transaction. Clients leave our offices feeling relieved that their concerns have been addressed and confident their interests are protected. 

Proactive & Practical Co-Ownership Agreements

Creating a co-ownership agreement is one way to pre-emptively address potential co-ownership issues. Much like business partners will enter into a partnership agreement when starting a business, a co-ownership agreement sets out each party’s responsibilities and obligations, the processes for handling eventualities such as the sale of the property, and the resolution method for potential disputes. Addressing these factors through a legally binding document grants all parties certainty and peace of mind and can also help avoid costly litigation if a disagreement arises. With a co-ownership agreement, the essential considerations have already been agreed upon, providing reassurances to all owners from the start.

The real estate lawyers at CM Lawyers work with each client to design a custom-tailored co-ownership agreement to suit their needs and thoroughly address the concerns of all parties. Ideally, these agreements will be entered into before or concurrently with the closing of a real estate purchase. However, they can be created even after the property has been purchased. 

What Is Covered in a Co-Ownership Agreement?

A co-ownership agreement sets out legally binding terms that address a variety of factors, including:

• The ownership structure;
• Expenses, including how will they be divided, and which parties will cover which costs;
• Property maintenance;
• In cases where the property will be rented out, how such rentals will be handled;
• Property insurance;
• Mortgage structuring;
• How a sale will be handled;
• The consequences of a default by one or more of the owners;
• When and how the co-ownership will be dissolved; and
• The preferred method for dispute resolution.

Types of Co-Ownership: Tenants-in-Common vs. Joint Tenancy

When entering a co-ownership arrangement, the parties must decide how they want the ownership to be structured. When a couple purchases a home, the standard form of ownership is joint tenancy. However, in a co-ownership situation, it is generally advised to adopt a tenancy-in-common. The primary differences between the two relate to the flexibility in terms of the share of ownership and how each person’s ownership will be dealt with if one party wishes to sell or passes away.

Tenants-in-Common

When parties are looking to share a property with individuals who are not their spouse or partner, tenancy-in-common is the recommended approach to ownership. With tenants-in-common, the owners can apportion shares of the property based on financial contributions or other determining factors. For example, if one person is paying 70% of the cost of the home, the ownership can be structured so they own 70% of the property and the other party owns 30%

Further, each share is owned independently and can be sold separately or passed down to beneficiaries in a Will. It is also recommended that a right of first refusal clause be included, requiring any owner wishing to sell their share to offer the chance to purchase it to the other owners before considering any third parties. This would also apply to an owner’s estate should they pass away.

Joint Tenancy­

In a joint tenancy agreement, each party is an equal owner of the property. Each name on title is entitled to an equal share in the proceeds upon sale, and it cannot be apportioned otherwise. Parties to a joint tenancy cannot sell their share of the property independently; the other owners must either buy them out or sell the entire property. Lastly, and perhaps most importantly, if one party in a joint tenancy dies, the ownership of the property transfers by right of survivorship to the other party or parties on title. A joint tenant may not leave a share of the property to other­ beneficiaries in their Will.

CM Lawyers: Providing Trusted Advice on Co-Ownership of Property in Vernon & Salmon Arm

Contact the experienced real estate lawyers at CM Lawyers for trusted legal advice and guidance regarding your co-ownership agreement. We have over 50 years of combined experience in real estate matters, and we can help ensure a harmonious joint venture with practical advice and meticulous contract drafting. We look forward to working with you to help you achieve your goals and bring certainty to your home ownership arrangement.

CM Lawyers has two offices, conveniently located in Vernon and Salmon Arm. We proudly serve the surrounding communities, including Northern Okanagan and Shuswap. To schedule a consultation, please call our Vernon office (250) 308-0338 or Salmon Arm (250) 803-9171 office or contact us online.