Buying a Home With Friends or Siblings in BC: Why a Co-Ownership Agreement Matters

With BC prices where they are, more people are buying with a friend, a sibling or an extended family member. Splitting a down payment and a mortgage can work well, as long as everyone is clear about the deal.

The trouble is that the land title records only who owns the property and how they hold it. It does not say who pays the strata fees, what happens if someone wants to sell, or who gets what if a co-owner dies. That is the job of a co-ownership agreement.

How you hold title: joint tenants or tenants in common

When two or more people buy together, the transfer registered at the Land Title Office records how they hold title. There are two main choices.

• Joint tenancy. Each owner holds the whole property together with the others. When one joint tenant dies, their interest generally passes to the surviving joint tenants, not through their will.
• Tenancy in common. Each owner holds a separate share, which can be equal or unequal, such as 60/40. When a tenant in common dies, their share forms part of their estate and passes under their will or, without one, under the intestacy rules.

Section 11 of the Property Law Act sets the default. When land is transferred to two or more people, they are tenants in common unless the transfer shows a contrary intention. If the shares are not stated, they are presumed to be equal.

For friends and siblings, tenancy in common is often the better fit, because few people want their share to go to a housemate rather than their own family. It also lets the title reflect unequal contributions. Our guide to what happens on the death of a joint tenant explains the survivorship rule in more detail.

What the title does not tell you

Even a carefully chosen title leaves important questions open:

• Who paid what toward the down payment, and is any of it a loan rather than a contribution?
• How are the mortgage, property tax, insurance, strata fees and repairs split?
• Who lives in the home, and can an owner rent out a room or the whole unit?
• What happens if someone stops paying their share?
• How does one owner leave, and at what price?
• What happens if an owner dies, loses capacity, separates from a spouse or goes bankrupt?

Without written answers, people rely on memory and goodwill, which can fade quickly when someone's circumstances change.

What happens if you cannot agree: the Partition of Property Act

If co-owners fall out and there is no agreement, the fallback is the Partition of Property Act. Under section 2, any joint tenant or tenant in common can be compelled to partition or sell the land. In practice, for a house or condo, the remedy sought is usually a sale and division of the proceeds.

• Majority request. Under section 6, if owners holding half or more of the interest ask for a sale, the court must order one unless it sees good reason not to.
• Any owner can ask. Under sections 7 and 8, even a minority owner can ask the court to order a sale.
• Buyout option. Under section 8 (2), the court may not order a sale on that request if the other owners undertake to buy the requesting owner's share, in which case the court can order a valuation.

Court proceedings take time and money, and they rarely leave relationships intact. Our article on forcing the sale of co-owned property covers the process. A good co-ownership agreement aims to make that a last resort.

What a co-ownership agreement should cover

Every agreement is different, but most deal with these points:

• Contributions and shares. Who paid what at purchase, and how that matches the shares on title.
• Ongoing costs. The split of mortgage payments, taxes, insurance, strata fees, utilities and repairs, and how improvements are treated.
• Use and occupancy. Who lives there, house rules, and whether renting is allowed.
• Default. What happens if someone falls behind, including the right of others to cover the shortfall and recover it.
• Exit and buyout. Notice periods, a right of first refusal for the others, how the price is set, for example by an appraiser, and a deadline to complete or list the property.
• Death and incapacity. How a share is dealt with by an estate or attorney, and whether the others can buy it.
• Disputes. A path such as negotiation, then mediation or arbitration, before anyone goes to court.

Mortgages, wills and other moving parts

A co-ownership agreement binds the owners to each other. It does not change your obligations to the lender. When co-owners sign a mortgage together, each borrower is often responsible to the lender for the full debt, not just their share, so an agreement on who pays what is a private arrangement among you.

Your agreement should also line up with each owner's will and powers of attorney. If you hold as tenants in common, your will decides who receives your share. Our overview of estate planning documents in BC is a useful starting point.

A co-owner's later marriage or marriage-like relationship can also affect how their share is treated if that relationship ends, which is another reason to review the agreement when anyone's circumstances change.

A note on severance: under section 18 of the Property Law Act, a joint tenant can transfer their interest to themselves, which severs the joint tenancy just as a transfer to someone else would. A clear agreement and the right form of title from the start avoid surprises later.

When to put the agreement in place

Ideally, put the agreement in place before you remove subjects or, at the latest, before completion, when everyone is still aligned and the numbers are fresh. It is often prepared alongside the conveyance, so the title, the mortgage documents and the agreement all tell the same story. Plan to revisit it if someone marries, has children, wants to move out or wants to bring in a new co-owner.

Buying with friends or family? Put the deal in writing before you complete

Our real estate lawyers can advise on how to hold title, draft or review a co-ownership agreement alongside your purchase, and coordinate the documents your lender and the Land Title Office will need.

Call 604-259-2844 or send us a message to arrange a consultation at our Vancouver office.