Buying Property With Someone Else? What Ontario Buyers Should Decide Before Closing
Buying a property with another person often starts with a shared goal. A couple may be purchasing their first home. Siblings might be pooling their money for an investment property. Friends may realize they can afford more by buying together. Parents might contribute financially to help an adult child enter the housing market.
At that stage, most of the conversations are about the property itself. How much can we afford? Who is contributing to the down payment? What neighbourhood makes sense? When can we close?
Far fewer people ask what happens if the arrangement changes.
What if one person contributes considerably more than the other? What if someone wants to sell and the other person does not? What happens if the relationship ends, one owner can no longer make the mortgage payments, or one of the owners dies?
These are uncomfortable questions when everyone is excited about buying a property. They can become much more uncomfortable when the answers were never agreed upon.
For Ontario buyers purchasing property together, some of the most important decisions should happen before closing day.
Who Is Actually Contributing What?
Two people buying a property together does not necessarily mean they are contributing equally.
One buyer might provide most of the down payment while both contribute equally to the mortgage. A parent might provide funds toward a purchase without intending to become an owner. One co-owner might pay for renovations while another handles more of the property’s ongoing expenses.
When everyone is getting along, these arrangements can feel straightforward enough that documenting them seems unnecessary.
The problem comes later when memories and expectations differ.
If one person contributes $150,000 toward a down payment and another contributes $50,000, what was the intention? Does the person who contributed more own a larger percentage of the property? Was part of the money a loan? Was it a gift? Were both people still intended to own the property equally?
Those questions are much easier to answer before the money changes hands.
Buyers should discuss their contributions, ownership expectations, mortgage obligations and ongoing expenses before closing and make sure the legal structure reflects what they actually intend.
Joint Tenants or Tenants in Common?
One of the decisions co-owners may need to make is how they will hold title.
In Ontario, two common forms of co-ownership are joint tenancy and tenancy in common.
Joint tenants generally own the property together with a right of survivorship. If one owner dies, that person’s interest in the property generally passes to the surviving joint owner rather than through the deceased owner’s estate.
Tenants in common hold separate interests in the property. Those interests do not necessarily need to be equal. One person could hold a 60% interest while another holds 40%, for example. When one owner dies, their interest can form part of their estate rather than automatically passing to the other owner.
Neither structure is inherently better.
The appropriate choice depends on who is purchasing the property, how ownership is intended to work and what each person wants to happen in the future.
The mistake is treating the choice as a technical detail on the closing documents without understanding what it means.
Does 50/50 Ownership Actually Reflect the Arrangement?
Imagine two friends purchasing an investment property.
One contributes 70% of the down payment. The other contributes 30%. They intend to split mortgage payments and property expenses equally once the purchase closes.
If title is registered equally, does that accurately reflect what they intended?
Maybe it does.
Maybe it does not.
The problem is not unequal contributions themselves. The problem is leaving the consequences of those contributions unclear.
Similar situations can arise between unmarried couples, siblings, parents and children, or business partners. If the financial arrangement and registered ownership do not tell the same story, disagreements can become much harder to resolve later.
This is why the conversation should go beyond simply asking whose names will appear on title.
Buyers should understand what percentage each person owns and whether that ownership reflects their actual agreement.
What Happens If Someone Wants Out?
This is one of the conversations co-owners rarely want to have before buying.
Everyone is planning to own the property together, so why discuss selling it?
Because circumstances change.
One owner may need access to their equity. Someone might relocate. An investment partner might want to pursue another opportunity. A relationship might end. One person might simply decide they no longer want to own the property.
Now imagine one owner wants to sell and the other refuses.
Who determines the property’s value? Can one owner buy out the other? How much time do they have to arrange financing? What happens if they cannot agree on a price? Who pays the expenses while the disagreement continues?
Without an agreement, what began as a shared investment can become a serious dispute.
Discussing an exit strategy before buying does not mean anyone expects the arrangement to fail. It means everyone understands what happens if circumstances change.
What If One Owner Stops Paying?
Owning property also means sharing financial obligations.
The mortgage still needs to be paid. So do property taxes, insurance, utilities, maintenance and repairs.
If one owner suddenly cannot or will not contribute, the other owner may feel forced to cover those expenses to protect the property and avoid a mortgage default.
That creates another question: does the additional money change the ownership arrangement, or is one owner simply owed reimbursement?
Again, what seemed obvious when the property was purchased may look very different after months of one person carrying the expenses.
A written agreement can establish how these situations will be handled before they become a source of resentment or litigation.
What Happens If the Relationship Changes?
Co-ownership disputes are not limited to married couples.
Friends can fall out. Business relationships can deteriorate. Siblings can disagree. Unmarried couples can separate.
When the relationship between owners changes, the property can quickly become the largest financial issue between them.
This is where assumptions made years earlier can suddenly matter.
One person may believe they are entitled to half of the property’s equity. The other may point to a larger initial contribution. Someone may want to remain in the property while the other wants their money out.
If these possibilities were considered beforehand, there may already be an agreed procedure for dealing with them.
If they were not, the owners may find themselves negotiating the rules at exactly the moment they are least likely to agree.
What Happens If One Owner Dies?
The form of ownership can also have significant estate implications.
For joint tenants, the right of survivorship can mean the deceased owner’s interest passes directly to the surviving joint owner.
For tenants in common, the deceased owner’s interest may instead form part of their estate and be dealt with according to their will or Ontario’s intestacy rules.
That distinction can produce very different outcomes.
Suppose two siblings own an investment property together. One dies and intends their share of the property to ultimately benefit their children. The way title was structured could become extremely important in determining what happens next.
Real estate ownership and estate planning therefore should not always be treated as separate conversations. For co-owners in particular, decisions made when purchasing property can affect what happens many years later.
Put the Arrangement in Writing
The recurring problem in all of these situations is not necessarily disagreement.
It is uncertainty.
People enter co-ownership arrangements with good intentions and assume they will work things out if circumstances change. By the time circumstances actually do change, each person may have a very different understanding of what “fair” means.
A properly prepared co-ownership agreement can establish expectations while everyone is still working toward the same goal.
Depending on the circumstances, an agreement may address contributions toward the purchase, ownership percentages, mortgage and property expenses, renovations, major decisions, use of the property, refinancing, buyouts, sale procedures and what happens if the owners cannot agree.
The purpose is not to predict every possible problem.
It is to make sure a disagreement does not begin with both sides arguing about what the arrangement was supposed to be.
Have the Difficult Conversation Before Closing
Buying property with someone else can be an excellent way to purchase a home, invest in real estate or build wealth together.
But sharing ownership also means sharing financial obligations and making decisions about an asset that may be worth hundreds of thousands, or millions, of dollars.
That deserves more than a handshake and an assumption that everything will work itself out.
Before closing, buyers should understand how title will be held, what each person owns, how expenses will be handled, what happens if someone wants out and how the property fits into their estate planning.
Those conversations may feel unnecessary when everyone agrees.
That is precisely when they are easiest to have.
How Levy Zavet Can Help
At Levy Zavet, our real estate lawyers assist Ontario buyers, investors and property owners with the legal issues that arise before, during and after a real estate transaction.
If you are considering purchasing property with another person, our team can help you understand your ownership options, identify potential risks and structure the arrangement so that everyone knows where they stand before the transaction closes.
Planning for what could happen later can prevent a shared investment from becoming a shared dispute.
Levy Zavet PC
416-777-2244 | Toll-Free 1-877-777-8977
levyzavet.com
