Co-buying when you aren't a couple
By Amy Brown-Bowers • Bankrate.com

Selling and splitting the profits
One of the most important things to talk about before co-buying is when and how you will go about selling the property. "People's lives change, and very often, they change very fast," Barkin says.

One owner may have a change in marital or financial status and may want or need to sell and move out. Or, the relationship may break down making living together untenable. Whatever the reason, it's important to plan ahead for the dissolution of the co-ownership relationship before you enter into it.

A common arrangement is that either party has first the opportunity to buy out the other party at fair market value.

After deciding on the when and how of selling, next you need to decide how to divvy up the profits. In simple cases where everyone made equal down payments and contributed equally to all expenses and upgrades, splitting the profits is easy -- down the middle.

But what if one partner made a smaller down payment than the other but then pays a greater share of the mortgage and maintenance expenses? Or what about if one partner is a contractor or handy person who, through unpaid labour, puts in new floors and other upgrades, causing the value of the property to increase? It's important to decide ahead of time how each person will be compensated for their contributions, financial and otherwise.

"There are any number of ways of approaching it ... but get professional advice. Get it vetted to see whether it makes sense and whether it's fair," says Wise.

Key concerns
Wise recommends that a written agreement be drafted, setting out each co-purchaser’s intentions regarding key concerns, which typically include the following:

• The financial aspects of the purchase and the respective contributions each party will make to the purchase price.
• The manner in which title will be held.
• If all purchasers are not named on title, there should be a specific statement as to the extent to which the interest of any unnamed partner is deemed to be held in trust by the others.
• The sharing of costs and liability related to financing, mortgage payments, utilities, property taxes, repairs and maintenance.
• The nature of any renovations to be undertaken and the understanding regarding the sharing of any related costs and expenses.
• An understanding regarding occupancy of the premises -- will all, some or none of the owners be living in the house?
• If the property is to be an investment property that will be rented rather than occupied by the owners as a principal residence, a statement of the parties' intentions regarding the allocation for tax purposes of any rental income and ultimate capital gains.
• Intended limitations on the ability of any purchaser to sell his or her interest to a third party without the consent of the other(s).
• Any rights of first refusal or any triggering events (such as a party's request to sell, an irresolvable dispute or the bankruptcy or death of a partner) that will entitle or require one or more of the parties to purchase the ownership interest of another.
• A specific formula to determine how the parties will split the proceeds of any eventual sale.
• A method for decision-making and dispute-resolution, such as mediation arbitration.

Amy Brown-Bowers is a writer living in Toronto.