When siblings share home ownership
My sister and I are thinking about buying a home together to help with affordability. What do we need to know before we go down this path?
Home ownership can be one of the most significant and rewarding investments you can make in your lifetime.
If you are looking to purchase a home with your sister, there are a few things you should take into consideration, as this is not a typical purchase by a single person or a married couple and is not a matrimonial home.
I advise you to consult with experts: a real-estate professional and a lawyer with expertise in real estate or estate planning law.
The real-estate professional can help the two of you decide on the type of home that will meet your needs, now and in the future. You should think about what you might do when you decide to sell the home or if one of you decides to move out, which leads to the need for legal advice on ownership of the property.
A real estate or estate planning lawyer can help you determine which type of ownership would work best for you and your sister. You can also work with the lawyer to make sure both of your interests are protected and to minimize the possibility of conflicts down the road should one of you change your mind about ownership.
There are two basic types of coownership of a property: one is called “joint tenancy” and the other is called “tenancy in common.” The word “tenancy” simply means ownership in this context and “tenant” means owner.
In joint tenancy, each co-owner has an equal, undivided interest in the property, rather than a percentage share. Therefore, when one joint tenant dies, his or her share goes automatically to the surviving joint tenant (s).
Joint tenancy is a common form of ownership for people who want their share in a property to go automatically to the other joint tenant, for example a spouse, when they die.
With tenancy in common, unlike joint tenancy, individuals can own a property in different shares or percentages. As an example, one owner (tenant in common) could own 60 per cent of the property and the other could own 40 per cent.
In a tenancy in common situation, each owner has the right to sell his or her share. Each owner also has the right to leave his or her share of the property to any beneficiary upon the owner’s death. This type of co-ownership is common for people who want to be able to sell their interest in a property during their lifetimes, such as a group of friends who invest in a cottage.
Bear in mind that when two or more people buy a property, the default type of ownership is tenancy in common, unless the deed states otherwise. Joseph Richer is registrar of the Real Estate Council of Ontario (RECO). He oversees and enforces all rules governing real-estate professionals in Ontario. Email questions to askjoe@reco.on.ca. Find more tips at reco.on.ca, follow on Twitter @RECOHELPS or on YouTube at youtube.com/ RECOHELPS