Co-ownership Agreements in Ontario

If you co-own property, learn how to structure an agreement to protect your interests.

By Emily Southey | 4 minute read

If you’ve purchased a property or are thinking of purchasing a property with another person,  chances are you need a co-ownership agreement. But there are different ways to co-own a home in Ontario. What type of agreement should be drawn up and what should it include? Keep reading for a complete guide to co-ownership agreements in Ontario.

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What is a Co-ownership Agreement?

A co-ownership agreement is an agreement between two or more co-owners of a property. The agreement governs the relationship and expectations of the co-owners in relation to the property. Co-owners can be individuals or corporations who intend to either occupy the property or hold it for investment purposes. Co-ownership agreements typically dictate terms relating to financing, property maintenance, and ownership interests. The contract will also outline each owner’s rights and responsibilities. Co-ownership agreements can be drawn up and signed at the same time the property is purchased, immediately after it is purchased, or at any time thereafter. There are three main categories of co-ownership in Ontario: occupying co-ownership (where the co-owners occupy the property), non-occupying co-ownership (where the co-owners do not occupy the property, and instead, sell or rent it out as an investment), and hybrid co-ownership (when the property is owned by co-owners, but one resides at the property and the other is a passive investor). 

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Regardless of which co-ownership category you fall into, it’s important to sign a co-ownership agreement any time you are in one of the following situations: 

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• You are purchasing a property with family or friends for residential purposes;
• You are purchasing a property with one or more people for investment purposes;
• You are purchasing a property with a partner, with varying interests in the property; or,
• You are trying to establish mortgage repayment arrangements or refinance in an effort to split the responsibility for your mortgage among multiple people.

Why Do Co-owners Need an Agreement?

Co-owners need a co-ownership agreement to mitigate risk. Without an agreement in place, purchasing a property with another person, whether they are your spouse or business partner, can be incredibly risky. But with such an agreement, you can reduce conflict, promote fairness, and save money. It’s a win-win for everyone involved. 

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Co-ownership agreements should be drawn up in all kinds of real estate ownership scenarios, regardless of whom you are buying the property with, whether you intend to occupy the property, or what kind of property it is (single or multi-unit). No matter if you are purchasing the property with your friend, family member, business partner, spouse, roommate, or an investor in your business, a co-ownership agreement needs to be prepared. In fact, co-ownership agreements are an excellent way of managing property ownership between spouses and can even be drawn up alongside marriage contracts. Other situations in which you might find a co-ownership agreement useful are as follows: 

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• If you are preparing a will or conveyance by a trust to multiple people as co-owners;
• If a family property is being passed down to future generations;
• If you decide to invest in property with family or friends, whether for residential, investment or vacation purposes, such as a cottage or time share;
• If you and your business partner decide to purchase a property together for commercial or investment purposes;
• If, after a divorce, you and your ex-spouse choose to rent out your property rather than sell it.

Determining Whether a Co-ownership Agreement is Needed

To determine whether you should prepare a co-ownership agreement for a property you are about to purchase, consider whether the following details have been discussed. If most of the details below have not been discussed between you and your future co-owner, you should seriously consider preparing a formal co-ownership agreement. Discussion topics include:

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• The planned contributions, as a percentage, of each co-owner toward the downpayment of the property;
• The financial contributions of each co-owner toward household capital expenditures, such as mortgage payments;
• Whether each co-owner’s mortgage contributions will vary over time;
• How the co-owners will take title to the property (whether they will be joint tenants or tenants-in-common);
• Whether all co-owners will own an equal interest in the property;
• How a co-owner’s ownership interest will be dissolved if they want to sell their interest or move out of the property.