Buying a Home With a Friend or Family Member. Is It a Good Idea?

Tell me if you've heard this before, Toronto real estate is expensive. Like, really expensive. And with interest rates and the economy doing what they've been doing the last few years, buying on your own has become genuinely out of reach for a lot of people who would otherwise be perfectly capable homeowners. Being single and wanting to buy a freehold home (not a condo) for what is currently an average price of close to $1.3 million (semi-detached) in a popular area is simply not possible for the majority of single people.

So what about joining forces with a trusted friend or sibling?

Pooling resources with someone you trust could be a smart and practical solution. Two incomes, two down payments, one mortgage. On paper it makes a lot of sense.

And it's not as uncommon as you might think. Co-ownership between friends, siblings, parents and adult children is becoming a real and increasingly popular path into the market. Heck, just a few weeks ago there was a segment on CP24 about it.

But, with such a huge finanical commitment you have to careful and consider a lot of things. So let's get into it!

The Good Stuff First

More buying power. Simple as that. Two people combining incomes and savings can qualify for more and afford more than either could alone. In a city like Toronto, that's not a small thing.

Shared costs. Mortgage, property taxes, maintenance, unexpected repairs. All of it gets split. That alone can make homeownership feel way more manageable month to month.

Building equity together. Instead of throwing money at rent, you're both building equity in something real. That's a pretty solid foundation to build on, financially speaking.

And I know this may sound cheesy, but, it can also just be really nice. Especially for people buying with a sibling or close friend, there's a built-in sense of accountability and support that comes with sharing a big purchase with someone you already trust. Remember long ago (like really long ago) building your secret club house or winter snow fort and how fun that was? It would kind of be like that, but on a much, much larger scale.

Now the Stuff You Need to Think About

Okay. Here's where things can get tricky.

The number one thing that causes co-ownership situations to go wrong isn't the market. It's not the mortgage. It's life. People's lives change. Jobs change. Relationships change. Someone gets married. Someone wants to move to another city. Someone loses their income. Someone just... changes their mind. You never know what the future holds afterall.

None of that makes co-ownership a bad idea. It just means you need to plan for it upfront, before everything is great and everyone is excited and nobody wants to be the one asking awkward questions.

The Co-Ownership Agreement. Non-Negotiable.

I cannot stress this enough. Before you buy anything with anyone who isn't your spouse, you need a co-ownership agreement drafted by a real estate lawyer. Full stop. No ChatGPT, no Reddit, no friend of a friend. Don't just wing it and "trust" your bestie. Book an appointment, and sit down with your potential partner and a lawyer and have a real and honest conversation. Then, get it on paper and signed.

The agreement should cover the stuff nobody wants to think about when they're excited about buying a place together:

What happens if one person wants to sell and the other doesn't? What happens if someone loses their job and can't cover their share of the mortgage? What if one person wants to rent their share out? What happens if someone passes away? How are decisions about renovations or major expenses made?

These aren't pessimistic questions. They're just smart ones. A good co-ownership agreement answers all of them before they become problems. CBC has a solid overview of what to think about here.

Joint Tenancy vs. Tenants in Common. You Need to Know the Difference.

When you buy with someone, you need to decide how you're going to hold title on the property. In Ontario there are two main options and they're pretty different.

Joint Tenancy means you both own the property equally and equally. If one owner passes away, their share automatically goes to the surviving owner, no questions asked. Simple and clean but it does mean equal ownership no matter what each person contributed.

Tenants in Common means each person owns a specific percentage of the property. So if one person put in 60% of the down payment, the split can reflect that. And if one owner passes away, their share goes to whoever is in their will, not automatically to the co-owner. This one tends to make more sense for friends or family members who aren't in a romantic relationship.

Talk to a Lawyer. Both of You.

Not just one lawyer. Ideally each person gets their own independent legal advice. It's not about distrust. It's about making sure everyone fully understands what they're signing and that nobody feels pressured or unclear about anything. A good real estate lawyer will walk you through the ownership structure, the co-ownership agreement, and what all of it means for your individual situation.

How to Split Things Fairly

This comes up a lot. What if one person has more savings and can put in a bigger down payment? What if one person earns more and can cover more of the monthly costs?

The short answer is that co-ownership doesn't have to be 50/50. As tenants in common, you can structure ownership to reflect whatever each person is contributing. That can be 60/40, 70/30, whatever makes sense. The important thing is that it's clearly documented and everyone agrees on it going in.

Same goes for ongoing costs. Who pays what each month? Who handles the property taxes? What's the process if a big repair comes up? Figure this out before you move in, not after.

One More Thing. Have the Hard Conversation First.

Before lawyers, before listings, before any of it, sit down with whoever you're thinking of buying with and have a genuinely honest conversation. Talk about your finances. Talk about your five year plans. Talk about what you'd each want to do if things changed. Talk about the awkward stuff.

If that conversation feels impossible or uncomfortable, that might be your answer right there.

But if you can get through it and everyone's on the same page? Co-ownership can be a really smart, really practical way to get into this market and build something together.

As always, if you have questions about any of this or just want to talk through whether it makes sense for your situation, you know where to find me.

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