Working Around the High Cost of Living in Vancouver
Buying a home in Vancouver can be challenging, and many first-time homebuyers are being priced out of the market because they are unable to save the huge down payment or qualify for a mortgage. One solution to these problems is to co-buy a home with more than one suite with friends or family. Some people call these "mixed mortgages". The best way to describe it would be a tenancy in common.
I co-purchased a home with friends and I think it was one of the best moves I have made. Living outside of Vancouver and commuting just wasn't an option for my family and I, so we made it work. When my wife found a sweet house in East Van, she sent out an email to some similar minded friends asking if any of them wanted to buy the house with us. One of the couples replied yes and the rest is history.
A legally binding document needs to be drafted that covers all of the different circumstances that may arise. This partnership or joint venture agreement should cover some of these basics:
Who pays for the purchase and maintenance of the house, and how ownership is divided.
Sales agreement in case one side wants to sell their share.
How the property will be divided if the friends/family decide to separate or if one person dies.
Enclose a first right of refusal clause into the agreement so whoever wants to stay has the ability to own the entire residence.
Regardless of who you’re buying with, whether a friend or sibling or parent, you must consult a lawyer and draft legal papers.
Pay attention to unbalanced arrangements at the outset. For example, if you’re contributing 100% of the down payment but the two parties will be splitting the expenses, you might want to be clear in your agreement that your down payment should be returned to you upon sale before profits are split.
In the end if there is a will, there is a way. Just cover your bases to avoid a confrontation in the future.
This arrangement doesn't work for everyone but it did for me along with a few other friends of mine and our partnership evolved into a solid friendship that gets better every year.