Many prospective co-purchasers ask themselves “Can this really work?”

Of course, it can!

In this case study, the co-purchasing group was a multigenerational family. A middle-aged couple aimed to help their son and his new wife achieve homeownership. To make the purchase more affordable, they decided to co-own a property with separate units. The parents provided a significant down payment, resulting in a larger ownership stake compared to the younger couple. This seemingly straightforward family dynamic highlights the importance of clear communication and planning even within close relationships.

Two Generations

Step 1: The Purchasing Group

A middle-aged couple wanted to help their son and new wife purchase their first property. For affordability, the family decided to co-purchase a 2-unit home.

Step 2: The Financing

They worked out a budget of $1 million for the purchase price. The parents contributed $300K for the down payment. Equity was split 38% for the younger couple, and 62% for the parents.

Step 3: The Group Agreement

Home maintenance costs were shared, but little else. No house rules or future scenarios were included in their co-living agreement.

Step 4: The Legal Agreement

The Legal Agreement was made between two couples. Both couples had the right of first refusal if one party decided to leave, but no future scenario contingencies were included.

Step 5: The Property

All adults worked in downtown Toronto, so TTC access mattered. Units needed to be completely separate. A 4-story duplex was purchased for $990K.

While this family was able to successfully co-purchase a home, after 4 years, the younger couple split up. The parents had the right of first refusal to buy their son’s share but they didn’t want to be landlords; their interest in the home had been centered around sharing it with their son and daughter-in-law. The home was sold for over 130% of what they paid for it. This group did not articulate their desires for potential futures in their Group Agreement.

Instead, they relied heavily on their existing relationships to mediate any issues that arose. In retrospect, this family wished that they had constructed the agreement as four individuals, rather than two couples. They didn’t consider divorce. The assignment of individual equity would have provided a mechanism for the son to buy out his wife’s share, allowing him the possibility of remaining in the home.

What’s in The Ultimate Introduction to Purchasing Co-Owned Real Estate?

1. Introduction to Co-ownership
2. The Benefits of Co-ownership
3. Getting in the Co-ownership Mindset
4. The Five Steps to Co-Owning Real Estate
5. Co-ownership In Action, Case Studies:
   1. The Golden Girls
   2. Multigenerational Magic
   3. The Single Moms Merger