Canadian credit union launches home co-ownership product
Canadian credit union Meridian has launched a product aimed at home buyers who want to co-own a property with family and friends. It allows up to four people to be listed on a home's title without incurring added charges. The move is a response to a growing trend for co-ownership between strangers as high prices leave many first-time buyers unable to get on the property ladder. In Toronto, the average house costs CAD916,567 ($686,200), while in Vancouver the figure is CAD919,300. 

Toronto residents Andy Stark, left, and Sylvia Proano with one of their two children.Tim Fraser/The Globe and Mail Share

When a house in their Leslieville neighbourhood sold this year for $1.2-million – nearly double the $695,000 asking price – Toronto residents Andy Stark and his wife, Sylvia Proano (below), found themselves wondering what many renters in the city are also pondering these days.

Toronto residents Sylvia Proano, left, and Andy Stark at their rented East-end home, where selling prices are soaring higher and higher. The Globe and Mail Tim Fraser The Globe and Mail

How would they ever afford to buy a home?

But the couple, determined to stay in the neighbourhood where their two young children are happy, may have an answer. Rather than split the cost of a home with rental tenants, they want to split an entire mortgage and everything else that goes along with home ownership, such as taxes, maintenance and insurance.

And they don't mind if that person is a stranger. The couple has plans to meet a likeminded woman this month.

"It's not really crazy. When you're renting, you're already sharing the space with people you don't really know," says Ms. Proano.

With the price of the average Toronto-area house hitting $916,567 and even Vancouver's slightly cooling market still leaving homes averaging $919,300, it is little wonder new home buyers are finding creative ways to cut their costs to buy in.

Lesli Gaynor, the Royal Lepage realtor working with Mr. Stark and Ms. Proano, herself shared a home with a friend and their children about 25 years ago. To get the word out about the benefits of co-ownership today, Ms. Gaynor threw an event at the Centre for Social Innovation co-working space in the Annex neighbourhood in February and 163 people showed up, she says. She plans to run a co-ownership speed-dating style event in May, too, where potential co-purchasers can connect.

"This is one of the many approaches to housing. There's laneway housing, tiny homes and Options for Homes (a Canadian non-profit housing developer). "Co-ownership is an option, too, if we actually have the right pieces in place," she says.

One of those pieces has finally landed in Ontario. Meridian, a credit union, recently launched a new mortgage that permits home buyers to purchase a home with family and friends, placing up to four people on title without incurring extra charges.

Bill Whyte, Meridian's senior vice-president and chief member experience officer, says the Family and Friends Mortgage is geared primarily to younger millennial buyers who are struggling to afford property.

"We've seen house prices really escalate over the last few years, and continue to escalate. There's limited supply," he says. "So this is a way to actually pool your resources together."

It is a mortgage option that is also getting Adrienne Crowder's attention.

"I am a single mom. I am a social worker. And I just bought myself a million-dollar house," she says by way of introduction over lunch in a busy downtown café in Guelph, Ont., a small city 1.5 hours west of Toronto.

Her story is not as unlikely as it sounds. Ms. Crowder bought her house, a large century home split into four apartments, in the spring of 2016 with the expectation that one day she would convince two or three other interested candidates to co-own the property with her. Today her son lives in one unit and tenants live in two others.

While the financial aspect of owning with others is a perk, it is not her main motivation for co-purchasing. It's about creating community and living in a space she loves rather than settling for a tiny condo.

"I'm part of a large cohort – single women in their early 60s and onwards – with enough money to purchase and with a desire not to live in a chicken hatchery for humans," she says.

Ms. Crowder is hoping with Meridian's mortgage available now, it might make it easier for her to entice potential co-owners to buy in. She and Lise Anne Janis, her realtor with At Home Group Realty Inc. Brokerage, have hosted talks and brunches to explain the concept. Sometimes 30 people show up. Sometimes three.

"I think Adrienne is a little ahead of the curve," admits Ms. Janis. "The idea of a mortgage with several unrelated people on it is something that really held up the opportunity for co-housing in Guelph and Ontario. The fact that Meridian is now putting the idea forward is a big step."

Even so, it is important not to rush into a co-ownership deal, says Lisa Niro, a lawyer with Bell Alliance in Vancouver, whose main practice involves real-estate law. She says she often gets calls from people looking into alternative ownership options, but who have concerns.

Her first piece of advice for those wanting to split a mortgage? Draw up a contract, a co-ownership agreement, and make sure it is thorough.

"Simple documents work great – as long as there are no disputes," she says.

The document, which Ms. Niro explains is binding, should cover everything from what percentage of the down payment each party will contribute to how to terminate the co-ownership deal. Even seemingly insignificant issues, such as who hoists recycling bins to the curb each week, should be put in writing.

"Everything looks fantastic at first, but it's these little items. People say, 'Well, why are we paying 50-50 on property taxes when you guys actually use more of the space than we do?'" she explains.

And in a case where someone loses a job and can't pay their portion of the mortgage, it's important to remember everyone else is on the hook for that money. She sometimes includes provisions in the contract maintaining that one co-owner can offer the other a loan with interest in that situation.

But even if the contract is drawn up and people find their perfect co-owning matches, sometimes simply finding an appropriate property can put the breaks on a deal. Arthur Irwin, a Toronto broker with Royal LePage Terrequity Realty, says owner-occupy units can be hard to come by.

"Often you'll have one unit that's fantastic. Great big space. And then the other unit is like the poor cousin that didn't quite make the cut," he explains.

Even with these types of challenges, Mr. Stark and Ms. Proano says they are still interested in co-owning. After all, what is the alternative? Moving to Guelph or Hamilton would mean a two-hour commute.

"If we really want to buy a house in today's market, we need to be creative and adapt," says Mr. Stark. "We're going to find a way to live in the city – as crazy as that might sound."