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What you need to know about co-buying property

What you need to know about co-buying property

(Photo credit: Jirsak/iStockphoto.com)

(Photo credit: Jirsak/iStockphoto.com)

Every time we hear about home prices, it seems as if they just keep going up. Many first-time homebuyers have probably cringed while hearing about the current state of Canada’s real estate market and while more and more future homeowners are relying more on mom and dad and other family members to pitch in money towards their purchase, others have turned towards co-buying a home with friends or family members.

It might sound crazy to buy a home with another couple or family, especially since there are any number of issues that could crop up, but as young couples yearn to own a home of their own, this might be the only way they can afford to buy property.

But before jumping into home shopping with a co-buyer, make sure to get all your ducks in a row.

Do you both want the same things?

Co-purchasing a property with someone else only works if you both want similar things. For example, if two young adults are looking to invest in a property and they’re both looking for a space within a city’s downtown core, a co-buying scenario could work. Or if there are two young families who are looking for a home that offers backyard space in a good school district, these two parties could come together through a co-buying agreement.

Before entering into an agreement, both parties would need to determine what must-haves they want in a property and what aspects they’re willing to compromise on.

Craft a detailed contract

Purchasing property can be an emotionally involved process since everyone is excited to shape their property into their home. Before starting the shopping process, a detailed contract should be hashed out. Buying a home involves a large sum of money and it’s important that your asset is clearly protected with a written agreement.

The best way to protect yourself is to treat the home purchase as you would a business arrangement. It should consider all types of situations, such as how should home maintenance costs be divided or how will unexpected housing costs be handled. Whether you’re buying a home with a good friend or close family member, it’s better for everyone involved if a lawyer drafts up the paperwork and that way everyone will have a clear idea of the expectations and responsibilities involved in owning a home.

What happens if things don’t go according to plan?

Plan for the worst and hope for this best is something you need to consider when handling your home purchase. For example, you may have done a home inspection and everything looks to be in good shape before you purchase, but there may be repairs that crop up once you move in. You and the other party should have a contingency plan in place on how to handle these situations.

Also, another realistic possibility to consider is if what happens if one party wants to move out, but the other doesn’t, or what happens if one party dies (as morbid as the thought may be). Within the contract, it should clearly state the process both parties will go through if these scenarios occur. This way there’s no confusion on what should happen next since there’s a legally binding contract in place that will spell out all the details.

If you’ve co-bought a newly built property, you may be able to qualify for an HST rebate, but it’s important that everyone’s name that appears on the property’s title is eligible too or you won’t be able to claim it.

Rebate4U can help homeowners determine their eligibility for an HST housing rebate. We strive towards providing our clients with the most professional and quality service in obtaining rebates for their new and renovated homes. We are proud to offer our clients the most personal and attentive service, and we make sure that all of our clients are 100% satisfied.

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