How to Buy a Home in Ottawa With Someone Else

Buying a home is one of the most significant financial decisions you’ll make in your life. But what happens if you want to buy a home with someone else? A friend, sibling, co-investor or another family member?

In Ontario, this approach can provide a practical way to enter the housing market especially as property prices rise. However, it’s crucial to understand the various ownership structures and agreements available when purchasing a home with others.

This blog will explore five key options for buying a home with someone else in Ottawa including tenancy in common, joint tenancy, early inheritance, shared equity and co-investment agreements.

1. What is Tenancy in Common?

One of the most popular methods for co-owning a property in Ontario is Tenancy in Common. This allows multiple parties to own a property together but with the flexibility to have unequal ownership shares. For example, one person might own 70% while the other owns 30%. Each owner has the right to sell, mortgage or even transfer their share independently making it an attractive option for friends or family members with different financial commitments.

Key Advantages:

Ownership shares can reflect each person’s financial contribution.
Flexibility to sell your portion without needing permission from the other owners.

Key Considerations:

If one party decides to sell their share then the others may need to buy them out or deal with a new co-owner.

Looking for more advice about buying a home? Check out these other blogs from our team next!

2. What is Joint Tenancy?

Another common arrangement is Joint Tenancy which is typically chosen by family members who want equal ownership. Under this structure all parties own the property equally and it includes the “right of survivorship” clause. This means that if one owner passes away then their share is automatically transferred to the surviving owners without the need for probate.

Key Advantages:

Simplifies estate planning by automatically transferring ownership upon death.
Ideal for close family members who want equal stakes in the property.

Key Considerations:

All decisions, such as selling or refinancing require unanimous agreement.
No flexibility in ownership percentages meaning you must split ownership equally.

3. Using an Early Inheritance Model

An increasingly popular option is using an early inheritance model. Parents or other family members may wish to gift part of their estate to their children or relatives while they are still alive, helping them purchase a property. This could be done by providing a down payment or by being co-owners.

Key Advantages:

Reduces the financial burden for younger generations trying to enter the housing market.
Helps parents manage estate taxes and distribution of assets.

Key Considerations:

The gift may have tax implications such as capital gains taxes if the parents later sell their share.
Clear agreements are essential to avoid family disputes down the road.

Building your budget? Get a clearer picture of your costs with our home buying calculator!

4. How Does Shared Equity Work?

Shared Equity involves partnering with an investor or government program to purchase a home. This arrangement typically sees an investor providing part of the down payment or financing in exchange for a share of the property’s appreciation when sold. In Ontario, shared equity programs like the First-Time Home Buyer Incentive (FTHBI) allow first-time buyers to take advantage of this model.

Key Advantages:

Reduces the initial financial burden of purchasing a home.
Offers access to programs designed to help first-time buyers enter the market.

Key Considerations:

When the property is sold a portion of the profit must go to the shared equity partner.
Clear terms must be set around exit strategies and appreciation shares.

Understanding home financing is a major part of buying a home. Check out these blogs for more important advice.

5. Signing a Co-Investment Agreement

A Co-Investment Agreement is a formal arrangement between two or more parties, whether friends, siblings or investors, who agree to purchase and manage a property together. This legally binding document outlines how expenses, maintenance and profits will be shared. It’s a good option for those looking to buy property for investment purposes such as rental properties or flipping homes.

Key Advantages:

Clear legal framework reduces the chance of disputes.
Ideal for investors who want to pool resources to purchase higher valued properties.

Key Considerations:

Legal fees are involved in drafting and maintaining the agreement.
All parties must agree on how to split costs, profits and management responsibilities.

Buying a home with someone else can be a smart strategy but it’s important to carefully consider the legal and financial implications of each arrangement listed above.

Protecting Everyone’s Interests

Whether you’re entering into a tenancy in common, opting for shared equity or receiving an early inheritance, having a clear agreement in place is essential. Make sure you consult a lawyer or financial advisor to ensure all parties understand their rights and obligations and to avoid potential conflicts in the future.

Ottawa’s real estate market can be challenging but with the right partner and ownership structure you can make homeownership more achievable and rewarding.