Any time that two or more unmarried individuals purchase a property, either to live in or as an investment property, they need to have a written agreement among themselves that states their intentions in regard to the property.
I hear the question frequently, “Do we need a co-habitation agreement?” More often I hear Buyers telling me that they need no agreement because they have been friends since Grade Four.
The issue is that relationships and friendships change as we grow. Sometimes those relationships and friendships grow tighter but usually they do not. Therefore, the short answer to any quuestion about whether an agreement is needed between co-owners is “yes“.
An agreement can be simple or complicated. No matter how simple it may be, it must be in writing. Sometimes, all it needs to say is that when one of the Buyers decide to sell there will be a right of first refusal granted to the other party at fair market value (realtors’ fees should be considered). If the other party doesn’t want to purchase, the Buyers should consider how the property will be listed for sale and at what price (an average of two appraisals?). As well, the Buyer needs to deal with who gets paid what portions of the sale price if there is a profit and if there is a loss.
Clearly, an agreement can be more complicated but please consider agreeing on at least those points in writing prior to completing your purchase.