Buying property with friends or family is becoming increasingly common, just like business partners acquire investment properties or establish operations. Purchasing property together helps you enter the real estate market, allowing you to pool your resources and increase your purchasing power.
Co-ownership can work well, but it also introduces legal complexities that are often overlooked. Changing expectations or disagreements are difficult to resolve without clear agreements.
At Cassady Law, we regularly handle real estate disputes that could have been avoided or at least simplified through clear planning and documentation.
Why Co-Ownership Is Common And More Complicated
High property prices across British Columbia have led many buyers to choose shared ownership as a practical solution. Parents and children will buy together, siblings inherit property together, and friends and business partners invest in real estate as a group.
Shared ownership creates ongoing legal relationships. Legal issues often emerge months or years later when personal or financial situations change.
What Does A Co-Ownership Agreement Do
A co-ownership agreement is a separate legal document that works alongside the purchase and sale contract. Its purpose is to clarify how each co-owner will manage the property over time. A co-ownership agreement can address:
- Each owner’s percentage interest in the property
- How down payments, mortgage payments, taxes, and repairs are shared
- What happens if one owner contributes more than the others
- What happens if one owner wants to sell their interest in the property
Without this clarity, disagreements can arise over who is entitled to what, especially when the property is sold.
Decision-Making and Use of the Property
Shared ownership also raises practical questions, such as:
- Who lives in the property, rents it out, or manages tenants
- How major decisions, renovations, or refinancing are handled
- What happens if owners disagree
A written agreement helps set expectations before conflict develops.
The Risks Of Only Having A Purchase Contract
Many buyers assume that standard purchase and sale contracts are sufficient to address all legal issues. The reality is that these contracts have a limited scope. They’re typically only drafted for the sale transaction and not long-term co-ownership.
A purchase contract alone doesn’t address vital questions, such as exit strategies or dispute resolution. Unresolved issues may become future sources of conflict. This is why it’s beneficial to review related contracts and agreements with a lawyer to provide clarity beyond your initial transactions.
What Happens When Things Change
Co-ownership has great potential but hinges on careful preparation and proactive communication. Consulting a lawyer to develop a clear co-ownership agreement can save significant time, money, and stress if future circumstances change. Taking these steps early helps protect your investment and preserve important relationships over the long term.
Co-ownership agreements are crucial for clarifying the legal rights, responsibilities, and long-term expectations of all parties involved. By establishing a comprehensive agreement, you reduce the risk of conflict, streamline future decision-making, and safeguard your investment and relationships.
Take the next step to protect your interests. Contact Cassady Law today to discuss your options, and we can help you ensure your property investment is secure and well-managed from the start.