Tag Archives: Co-Ownership

How to buy in a time of escalating prices

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How to buy in a time of escalating prices

Affordability is a hot topic today when it comes to new home real estate, including condominiums. Yes, prices are prohibitive for many prospective buyers. The thing is, however, that people are purchasing with enthusiasm, as they recognize what a great lifestyle and financial investment a condo in Toronto or the GTA is these days.

How can they afford it? The down payment is often the deterrent to buying, but perhaps the bank of mom and dad can help with that. Sometimes, parents of grown children purchase a condo suite for their offspring to live in temporarily while in college or university, then hand over ownership once the young people finish their post-secondary education, are employed and can afford to keep up mortgage payments.

Then again, some buyers are harnessing out-of-the-box thinking when it comes to affordability. For example, co-ownership has become an alternative for many. Co-ownership involves non-related (often) people or relatives sharing ownership of a home. Although it is not an entirely new concept, it is gaining such popularity that the Province of Ontario has developed a guide called “Co-owning a home.” You can find the guide at ontario.ca/document/co-owning-home.

Part of More Homes, More Choice: Ontario’s Housing Supply Action Plan, this guide was developed after roundtable discussions with stakeholders to determine best practices and what advice people would need. The benefits of co-owning include more than just affordability; buyers can have access to living quarters larger than they could on their own. Someone who can afford only a compact one-bedroom suite may be able to go for a larger two-bedroom suite by co-owning.

The guide is, however, not the ultimate when it comes to the rule of law. The Province advises that it is important to obtain legal advice to protect your interests when co-buying. There should be a legal contract that all co-ownership purchasers sign to clarify rights and responsibilities. This legal agreement may possibly support an application for mortgage financing as well.

Financial outlays include mortgage payments, property taxes, utilities, repairs and home insurance. How will these be divided? In addition, there is a lot to consider besides who pays what, when. For example, how will the workload to keep up the suite be divided? How and when can the suite be used to entertain guests? If life circumstances change, can the co-ownership agreement be altered? What happens if and when one of the parties wants to leave the co-ownership arrangement?

Work with an experienced sales person who is familiar with co-ownership, as well as a real estate lawyer who understands the process. Co-ownership of a condominium suite can be an effective and smart way to enter the new home real estate market to build equity together. The great news is that mortgage interest rates remain low, so the moral of the story is to get in now, rather than later. I always say, a happy purchaser is an educated, informed one.

BARBARA LAWLOR is president and CEO of Baker Real Estate Inc., winner of the pinnacle 2017 Riley Brethour Award from BILD, and an indemand columnist and speaker. A member of the Baker team since 1993, she oversees the marketing and sales of condominium developments in the GTA and overseas. Keep current with The Baker Blog at blog.bakerrealestate.com

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Why condo co-ownership is gaining popularity

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Why condo co-ownership is gaining popularity

More Canadians are partnering up with friends and family to buy a condo. New data from Teranet, the provider of Ontario’s online property search and registration, shows co-ownership in condominiums specifically was more than 37 per cent in 2018. With condo prices continuing to rise year over year, for many, pooling their money is the only option to get into the condo market. For others it’s a more creative way to manage a huge responsibility, like owning real estate. Here is what the latest data shows.

The trend is growing

Compared to data from 2012 more condo purchases are being made with more than one person on title. Condos with only one person on title in 2018 was 48 per cent. That is down from 57 per cent in 2012. Parents are pitching in more too. For example, units owned with parental assistance is at more than 14 per cent. Compare that to 2012 when only nine per cent of condos were purchased with help from mom and dad.

Owners close in age

The data from Teranet show co-owners are relatively close in age. That number has also risen slightly. In 2012, 50.1 per cent of the province’s homes had several owners on title, with the age gaps being 20 years or less. This proportion went up to 51.6 per cent by 2018. The rise is small, but shows more people, young or old, are choosing to buy together, whether it be young people buying their first home, or retirees deciding to downside together.

Financing options

Owning a house with a friend of family member means you will need to apply for a co-mortgage. Some financial institutions are now launching products that are specifically aimed at this group of people eager to find a way to buy their first home. There are many factors to consider in a co-ownership situation. This will include how the regular monthly bills will be handled, who will get what room and how emergency costs can be covered. As well, have an exit plan if you co-own a property.

Consider the future

Unlike when you buy with your spouse or long term partner, life can change at different times. One co-owner may meet someone and want them to move in. Another may get a new job and want to sell the home and take the equity to buy a house elsewhere. Draw up a plan now of how you will handle the sale of the home and what each co-owner’s expectations are.

With co-ownership of condos on the rise, more needs to be done to protect all those involved in the transaction to make sure the real estate purchase is worth it for everyone.

Rubina Ahmed-Haq is a journalist and personal finance expert. She is HPG’s Finance Editor. She regularly appears on CBC Radio and TV. She is a contributor on CTV Your Morning and Global Toronto. She has a BA from York University, received her post graduate journalism diploma from Humber College and has completed the CSC. Follow her on Twitter @alwayssavemoney.

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