Buying a Home With Family or Friends in Victoria BC | Co-Buying Guide

With the cost of buying a home in Greater Victoria, some buyers are starting to think beyond the traditional idea of purchasing a property on their own or with a spouse.

What if you bought with a sibling? A parent and adult child? Two friends? Or perhaps two couples purchasing a larger property together?

Pooling resources can potentially give buyers a larger down payment, greater purchasing power and access to homes that might otherwise be out of reach. It can also make a detached home, townhome or property with separate living areas more realistic.

But co-buying is much more complicated than simply splitting the mortgage payment.

If you are considering buying a home with family or friends in Victoria, some of the most important decisions should be made before you start looking at properties.

Why Are More Buyers Considering Co-Buying?

The basic idea is simple: instead of one household carrying the entire cost of home ownership, two or more people combine their financial resources.

Depending on everyone's financial circumstances and the lender's requirements, this may allow buyers to consider a different type of property, a preferred neighbourhood or simply enter the housing market sooner.

In Greater Victoria, it can create some interesting possibilities. Instead of two people each trying to purchase a smaller condo, for example, they might consider buying a house together with a suite, a home with two distinct living areas or a property that can comfortably accommodate more than one household.

That does not automatically make co-buying a good decision. The numbers, property and relationship all need to work.

Start With a Very Honest Financial Conversation

Before scrolling through listings together, everyone involved should be willing to have a transparent conversation about money.

That means discussing much more than how much each person has saved for a down payment.

You should understand:

• How much each person can contribute toward the down payment
• How the monthly mortgage payment will be divided
• How property taxes, insurance and utilities will be shared
• How routine maintenance will be paid for
• How major repairs will be handled
• Whether everyone has sufficient emergency savings
• How renovations and improvements will be funded
• What happens if one person's income changes
• What happens if someone can no longer pay their agreed share

This is not the time to be uncomfortable talking about money. If you are going to own a significant financial asset together, everyone needs to understand exactly what they are agreeing to.

What If the Down Payments Aren't Equal?

This is an important issue and one that can easily be overlooked when everyone is excited about purchasing a home.

Suppose two friends buy a property together, but one contributes $150,000 toward the down payment and the other contributes $75,000.

Does that automatically mean they own the property in different percentages? Does the person contributing more receive their additional contribution back first when the property is eventually sold? Will the mortgage payments be equal?

There isn't one correct arrangement.

What matters is that everyone understands the arrangement and that it is properly documented with professional legal advice rather than relying on an informal understanding between friends or family members.

How Will You Own the Property?

Another important conversation involves how title to the property will be held.

In British Columbia, co-owners may encounter terms such as joint tenancy and tenancy in common. They are not interchangeable and can have important consequences.

Joint Tenancy

Joint tenancy generally includes a right of survivorship. This means that when one joint tenant dies, their interest in the property generally passes to the surviving joint tenant or tenants rather than passing through the deceased owner's estate.

Tenancy in Common

With tenancy in common, owners can hold separate interests in the property, and those interests do not have to be equal. An owner's interest may form part of their estate when they die.

Which ownership structure is appropriate depends on the buyers' circumstances and intentions. This is a conversation to have with a BC lawyer or notary before completing the purchase.

Remember: Sharing a Mortgage Means Sharing Responsibility

Co-buyers sometimes focus on how they intend to divide the mortgage payment between themselves. Your lender, however, will determine the obligations of everyone who signs the mortgage.

A private agreement saying that one person is responsible for 40% and another for 60% does not necessarily change the obligations borrowers have to the lender.

Before purchasing, make sure everyone understands the mortgage commitment they are making and what could happen if another borrower could no longer contribute.

The Co-Ownership Agreement May Be One of Your Most Important Documents

Nobody enters a co-buying arrangement expecting the relationship to go badly. But people's lives change.

Someone may get married. Someone may have children. A couple could separate. One owner could be transferred for work. Someone may want to buy another property. An owner could experience a financial setback or simply decide they no longer want to live there.

A properly prepared co-ownership agreement can establish the rules before these situations occur.

A legal professional may suggest addressing questions such as:

• What percentage of the property does each person own?
• Who contributed what to the original purchase?
• How are mortgage payments and ongoing expenses divided?
• How are major repairs paid for?
• How are renovations approved?
• Can an owner rent out their portion of the property?
• Can another person move into the home?
• What happens if one owner stops paying their share?
• What happens if one owner wants to sell?
• Do the other owners have the first opportunity to buy that person's interest?
• How will the property's value be determined for a buyout?
• How are selling costs divided?
• What happens if the owners cannot agree?

It may feel overly formal when everyone is excited about buying together. In reality, having these conversations upfront can help protect both the investment and the relationship.

Think About the Exit Before You Buy

This is probably the least exciting part of co-buying, but it may be one of the most important.

What happens when somebody wants out?

Imagine three years from now one owner receives a job opportunity in Vancouver and wants to move.

Can the remaining owner afford to buy that person's interest? Can a new co-owner replace them? Would the entire property need to be sold? How would you determine a fair buyout price?

And what happens if one owner wants to sell but the other doesn't?

A good co-buying plan doesn't just explain how you will purchase the property. It also provides a framework for how you can eventually unwind the arrangement.

What If Someone's Relationship Changes?

This can be particularly relevant when several friends, siblings or couples buy together.

What happens if one owner gets married? Can their spouse move into the property? What if two of the owners are a couple and later separate?

These aren't particularly enjoyable scenarios to discuss, but they demonstrate why co-ownership needs to be treated as a serious financial arrangement rather than simply a living arrangement between people who know each other well.

Estate Planning Matters Too

Owning real estate with another person can also affect estate planning.

What happens to an owner's interest if they die? The answer can depend partly on how ownership is structured and the owner's individual circumstances.

This is another reason co-buyers should discuss the proposed ownership arrangement with a lawyer or notary and consider whether their wills and broader estate plans need to be updated.

Get Mortgage Advice Before Looking at Homes

Financing a co-purchase can be different from a typical mortgage application.

Before deciding what you can spend, speak with an experienced mortgage broker or lender and explain exactly who intends to purchase the property, where the down payment is coming from and who will be living in the home.

The lender will assess the applicants' income, debts, credit, down payment and other factors when determining qualification.

Getting this sorted out first gives everyone a realistic purchase range and prevents you from becoming attached to a property that doesn't fit your financing.

First-Time Buyer Benefits Can Get Complicated

If one or more of the people purchasing the property are first-time buyers, don't assume everyone will automatically receive the same exemptions or benefits.

Eligibility for government programs and property transfer tax exemptions can depend on the individual purchaser, the property, the buyer's interest in the property and the rules in effect at the time of the transaction.

This becomes especially important when one buyer qualifies for a program and another does not.

Before writing an offer, have your lawyer or notary and mortgage professional confirm what programs or exemptions may apply to each purchaser and how the proposed ownership structure could affect them.

Don't Forget About Home Insurance

The insurance company also needs to understand how the property will be owned and occupied.

A home occupied by two separate households, a property containing a suite or a situation where part of the home may eventually be rented can raise different insurance considerations.

Discuss the intended use of the property with an insurance professional before removing your conditions so that you understand whether appropriate coverage is available and what it is likely to cost.

Choosing the Right Victoria Property for Co-Buying

Once the financial and legal framework is clear, the property search becomes much more interesting.

A home that works beautifully for one family may be frustrating for two independent households.

When evaluating a property for co-buying, I would pay particular attention to:

• Separate or semi-private living areas
• Number and location of bedrooms
• Number and location of bathrooms
• Separate entrances
• Parking
• Storage
• Laundry arrangements
• Outdoor space
• Sound transfer between living areas
• Suites and their legal or authorized status
• Potential for future renovations
• Zoning and municipal requirements
• Resale appeal if the co-ownership arrangement eventually ends

Privacy deserves more consideration than people sometimes give it.

Sharing expenses may sound great. Sharing one kitchen, one bathroom and every evening together can be a very different proposition.

Houses With Suites Can Be Particularly Interesting

For some co-buyers, a home with a secondary suite or another well-separated living area can provide a useful balance between shared ownership and personal independence.

For example, a parent and adult child might prefer separate living spaces while sharing ownership of the property. Two friends might prefer different floors. Two couples may want substantially independent areas.

But don't assume that because a listing describes a property as having a "suite," it can automatically be used exactly as you intend.

The suite's permits, construction history, zoning, insurance implications and financing should all form part of your due diligence.

What About Buying a Strata Property Together?

Co-buyers can certainly consider condos and townhomes, but strata properties introduce another layer of rules and financial considerations.

Before purchasing, review the strata documents carefully and make sure the bylaws work with your intended living arrangement.

You will also want to understand the strata's financial position, depreciation report, contingency reserve fund, insurance, meeting minutes and any upcoming major projects or special levies.

If several people are pooling their resources specifically to make ownership more affordable, an unexpected special levy can be particularly important to plan for.

Who Pays for Renovations?

Suppose one owner wants to spend $40,000 renovating the kitchen and another thinks the existing kitchen is perfectly fine.

Who decides?

And if one owner pays for the entire renovation, does that change their ownership percentage? Do they receive that money back when the property is sold? What if the renovation doesn't increase the home's value by the amount spent?

A good co-ownership arrangement should establish how significant improvements are approved and funded before the first renovation disagreement occurs.

A Simple Victoria Co-Buying Example

Don't Forget the Day-to-Day Stuff

Some of the biggest disagreements between co-owners may not be about the mortgage. They may be about ordinary life.

Who gets the garage? Can someone's partner move in? What about pets? Who maintains the garden? Who gets which storage area? Can one owner renovate their part of the house? How are common areas used?

You don't necessarily need a written rule for every tiny detail, but discussing how you expect to live in the property can reveal whether the arrangement is genuinely workable.

10 Questions to Answer Before You Buy Together

A Co-Buying Checklist

Is Co-Buying a Good Idea?

It can be.

Buying with family or friends can potentially make home ownership more accessible and give buyers options they might not have individually.

But co-buying shouldn't be viewed simply as a workaround for high home prices.

You are entering a significant financial and legal relationship with another person. The strength of that arrangement isn't determined only by how well everyone gets along today.

The strongest co-buying arrangements are the ones where everyone understands the finances, ownership structure, responsibilities, living arrangements and exit plan before purchasing the property.

Thinking About Co-Buying in Victoria?

If you're considering buying a home with family or friends in Victoria, I can help you work through the real estate side of the equation before you start seriously looking at properties.

That includes identifying homes that could work well for multiple owners, evaluating suites and layouts, looking at resale considerations, reviewing property information and helping coordinate the due-diligence process with your mortgage, legal and other professionals.

My role isn't to tell you whether co-buying is right for you. It's to help you understand the property, ask the right questions and make a well-informed real estate decision.

Sometimes the right buying strategy isn't simply finding a less expensive home. It is finding a smarter way to buy the right one.