There are many models and resources for collective decision making, and we recommend that you determine a decision-making structure with your group early on.
You will have many decisions to make throughout the process of co-purchasing your home, and developing skills and concrete systems for making collective decisions will only benefit your group as you continue to live together after your purchase; home dynamics, spending, budgets for renovations, activities within your house, etc. are all areas that will require ongoing communication and decision-making with your group.
Your group may want to make decisions by putting them to a vote, and document your distribution of decision-making power in your legal agreement. Your group may want to operate by unanimous consensus, or make certain decisions by authority, whereby one party has the final say. It is up to your group to determine which model(s) work best for you.
As we mentioned in Step 2, equity shares are not necessarily a mirror reflection of decision-making power. Every group is different, and members can contribute many things to a living arrangement that aren’t always financial. Depending on the activities and requirements of your home, decision-making power can have a very different distribution.
Equity is about the percentage of ownership of the property.
Decision-making power decides what happens in your home.
The equity shares of the home are decided by mutual agreement and should be done when your budget is set, and finalized when your property is purchased.
Look at the different allocations of equity vs. decision-making power within these 3 households:
| Households | Household A | Household B | Household C |
|---|---|---|---|
| Composition of purchasing group | 4 seniors in a 4-bedroom, 4-bathroom home | 1 couple and child 1 senior adult in main-floor studio |
2 couples in a 4-story duplex |
| How is the home equity distributed? | Even split: 4 x 25% | Couple and child: 50% Senior adult in studio: 50% |
Couple 1: 60% Couple 2: 40% |
| What is the distribution of decision-making power? | Even split: 4 x 25% | Even split amongst 3 adults: 33% each. | Even split: 50% each |
Other ways to consider equity and decision-making power:
Your group may want to differentiate decision-making power for daily maintenance and activities and, for example, future capital expenditures like renovations.
Your group may want to give some parties decision-making priority on certain issues.
Your group may want to identify a third party mediator to help you in the event that a group decision can’t be made to the satisfaction of your group (i.e. difficulties coming to consensus or a deadlock vote).
Your Group Agreement should include a description of your collective decision-making process. It should be as specific as possible and we recommend that you consider including it in your Legal Agreement (See Step 4).
Once your group has solidified your model for collective decision making, it is time to move on to communication.
How Do You Create Your Group Agreement?
Click on the sections below to learn more.
What are all the Steps to Becoming a Co-owner?
Click on the links below for all the blog articles related to each step.
“ You should put as much as you know about how the house will run in your legal agreement. You should also include how you are resolving simple disputes. Clearly stated rules or guidelines help avoid bigger issues down the road.”
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