Buying a Home with a Friend? Here’s Info on
Different Types of Ownership
OWNERSHIP OF THE NEW
PROPERTY:- There are two types of ownership. talk to your lawyer about how you
want to handle it. Here are examples where A and B buy a property together. For
those coming into a property from previous relationships that have children,
this topic is something to be considered seriously as it'll affect your
children directly.
Joint Tenancy: This type of ownership is
common in marriages. If one of you dies, the other gets the property
automatically without the property having to go through probate. This means if
A dies then her half would go automatically to B who is the other owner. Even
if A has children separate and apart from B, the property would go to B
automatically.
Tenancy in Common: This type of ownership
would be common in mutual investments on property. i.e. Two people who want to
purchase single family home together, but who want to ensure that they can
direct the proceeds of the property to whomever they wish should they pass
away. So, if A passes away, she can pass the percentage ownership through her
will, to her children. The half ownership does not go to the other original
purchaser automatically. You also need to set the percentage ownership at the
time of purchase... 50/50; 60/40 etc.
It is important that you
talk to the lawyer about how you will go about owning the property as well as
the procedure for sale or disposal of the assets should you pass away or if one
of you wants to leave the property. Some questions to ask each other are: Are
you going to give the other first chance at buying your portion out? Will there
be a timeline involved in making and then accepting of the offer? Can the sale
price be tied to a property assessment from a Appraiser? What is the recourse
if you don't like the appraiser's outcome?
Agree to all of this
while you have a rosy perspective on your purchase and each other.
Here is an excellent
article for further reading: http://estatelawcanada.blogspot.com/2010/01/joint-tenants-vs-tenants-in-common.html