Bedard & Belardi Family
Mary-Anne and Jean-Paul’s son Noah came to them about 4 years ago to ask for help with a down payment for a house. Noah and his wife Jackie were just starting out, had a small down payment of $30,000 but did not yet have a sense of the market and what they could afford.
Wisely, Mary-Anne and Jean-Paul suggested they speak with a mortgage broker to better understand their options. In looking at their finances and the housing costs in Toronto, the mortgage broker suggested that the only way they could get into a house was to have some form of rental income associated with it; they could purchase a small house with a basement apartment or they purchase a larger home and live in a smaller unit, renting out the larger unit.
Both of these scenarios had risk associated with them. What would happen if they had difficulty acquiring a tenant or had a tenant default on their payment? They also had significantly increased borrowing costs with CMHC insurance.
They all thought the idea made sense so they reached out to a real estate agent . Their agent was great; she discussed their needs and wants with them collectively as well as individually and then worked with the two families to help them discuss the non-negotiable items, which included:
- Mary-Anne and Jean-Paul being no worse off than before (their mortgage could not be higher than it was currently)
- The costs being within Noah and Jackie’s budget
- There be two completely separate units with shared outdoor space
The two families agreed on a budget and an ownership structure that had Mary-Anne and Jean-Paul own 62% and Noah and Jackie own 38%. They worked with a mortgage broker to find a lender that would enable them to have two separate mortgages on the same property. This was more difficult than one would think, at the time National Bank was the only lender that provided this option
Openness, honesty, upfront organization and planning has made co-ownership a success
The two familiesworked with a lawyer to draft a co-ownership agreement that included what would happen in the event of death, divorce and the need for capital improvements the house. They recognized the importance of thinking about potential issues and agreeing on strategies when they are not in the middle of dealing with the issue. They made an effort to distinguish between required improvements and aesthetic improvements, agreeing that aesthetic improvements are the responsibility of the unit’s owners and not the collective even though there is recognition that it benefits the collective.
They also established ground rules for daily living. The house is keyed with the same locks but they have an agreement that you needed permission any time you would like to enter the other’s home. So if you want to borrow a cup of sugar, you have to email or text and get permission. They also agreed that there is no obligation to answer texts or knocks on the door regardless if you are home or not.
2.5 years in and Mary-Anne describes co-ownership as FANTASTIC!
She recognizes that there is a lot of risk. They only have one child so this is putting their relationship on the line but feels that it has very much benefited both couples. For Noah and Jackie, they are able to afford exponentially more space (they have a three-bedroom unit with a large kitchen in a spacious old Victorian with a backyard. Had they bought on their own, they would have had to purchase something much smaller with a rental unit or a condo). They are also able to benefit from the capital appreciation on a lager home in downtown Toronto. Mary-Anne estimates that they have earned approximately $60,000 in equity in since purchasing.
For Mary-Anne and Jean-Paul, this provides a lot of benefits in terms of the relationship (they are looking forward to a future of helping take care of the grandchildren) as well as support when for travelling and with pets – all together, the couples have 3 cats and 1 dog.
It has also provided a lot of benefits to their relationship. Parental visits have shifted from longer; pre-organized efforts to quick short visits and drop-ins. It has moved from “let’s have dinner next Sunday” to “I just baked some cookies if you want to come up for coffee”. Both families enjoy this and feel that it brings a new level of ease and support.
The only drawback they currently see is that they know more about each other’s lives than they would normally. Both families approach this in a mature fashion and recognize that each family has their own approach to life.
In terms of advice, Mary-Anne suggests having a legal agreement as well as a time frame for a commitment.
Both families value the agreement they have and have committed to a minimum of 5-7 years. This ensures that there is enough time in the effort that they can all benefit from the investment.
Mary-Anne is a big fan of co-ownership and sees it as an opportunity to better use the existing housing stock we have to address the housing crisis as well as to help build connection in a city. It offers new ways of living together and experiencing extended families and intergenerational relationships – this has significant benefits.