Buying Real Estate With Friends? Use a Co-Living Agreement

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If affording Real Estate in Toronto is out of the question for you, there may be a light at the end of the tunnel.

With prices of Toronto and Vancouver Real Estate skyrocketing, co-living is starting to become an increasingly popular way for people to get into the market. According to a report by RE/MAX realtors, more than 40% of Canadians overall would think about buying with a friend or relative.

So, what is co-living?  Co-living (or co-housing as it’s sometimes called) is where residents share living space and a set of interests, values, and/or intentions.  It’s a new take on an old idea, inspired by the sharing economy.

Essentially, it involves buyers sharing occupancy and ownership costs of buying a home.   It could be with friends, family members, or in a growing amount of cases, strangers. Sharing the costs of the down payment, mortgage payments, utilities and property taxes opens up a new door to home ownership, but what are the risks?

No matter if it’s family, your best friend or a stranger, it is important to consider that priorities can change and things can always be unpredictable.  While owning even a part of a home is an asset, it may not be as easy to pull out your money and walk away should things not work out.

Therefore, having an airtight and binding arrangement is essential before agreeing to a co-living agreement or co-investment situations.  Here are some of the elements we suggest discussing with (and eventually agreeing on) with your co-living partner(s):


  • Understand initial outlays such as deposits, closing costs
  • Calculate operating costs such as property taxes, utilities, repairs, maintenance fees, etc.

Financing and Deposits

  • Did all parties pre-qualify for their portion of the required financing?  
  • Does everyone have access the needed deposits or down payments, plus closing costs?

Equity and Ownership

  • What percentage of ownership does each party get on title?
  • How will you divide ongoing expenses such as repairs and insurance?


  • What happens when all parties agree to sell?  
  • What happens when one or more of the parties do not agree to the sale of the property?  
  • How is risk/reward shared in a market where a property may appreciate (or depreciate)
  • What process will be used to value the home should there be a sale

Management and Rules of the House

  • Dividing up common chores such as, for example, cutting the lawn
  • What would happen if one person becomes unemployed or ill and can’t afford to pay his or her share of the mortgage
  • If one of the co-owners falls behind on mortgage and tax payments, how does the other owner recover his or her share of the arrears?

Even though some of these items may lead to a naturally uncomfortable discussion, it is critical to have an agreement in place that ensures not only the smooth operation of the property, but a fair division of ownership and a fair way to unwind the partnerships should things go in a different direction.

Consulting an experienced lawyer is an essential part of ensuring a fair, binding and enforceable co-living agreement.  It is a worthwhile expense, even if things are looking rosy at the moment.

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