Hey friends…Let’s get together and buy a house!

Everyone knows it’s tough getting into the housing market without the Bank of Mom & Dad. What if you get a bunch of your friends together and pool your resources?

It’s not a terrible idea, but it comes with a few caveats.

It has been said that nothing ruins a good relationship faster than money. The implication of this is you need to document, and I mean legally document, term specific terms under which this purchase will take place; share of contribution, costs, who pays for what, do the costs all get reconciled periodically, what is someone wants to sell their share, should we set up a trust…so many things to consider.

Do you really know your friends…I mean do they have debts you don’t know about, is their credit score good or bad, have they filed their taxes…all these things will have to come out if you are looking for a mortgage.

Speaking of mortgages…we will need to see under the hood for everyone involved in the transaction. Credit history, sources of income, down payment, other assets and liabilities. It all has an impact. Also, not all companies are interested in multi-person transactions, so this may be limiting.

Finally…can you actually do it? Believe it or not jurisdictions have regulations limiting the number of unrelated individuals who can occupy a property. This can also impact your insurance. So check the paperwork.

Co-ownership is not impossible, it’s just complicated.

If you want to speak more about this you can reach me through my website: stevewillson.ca

I’m Steve Willson, a licensed Mortgage Agent Level 2 with Mortgage Alliance in Toronto.

These are my thoughts on the subject of co-ownership. You should refer to the appropriate legal and other professionals before doing this!