Due to the rising cost of purchasing or renting a home, unrelated buyers and tenants are getting together to either buy or rent a home together, to get more for their money. In a recent newspaper article, I read about four young professionals who were able to rent a detached home together for less money than they would each have to pay for a one-bedroom apartment.
Here are five tips to remember when you are buying or renting together.
1. When renting, everyone will have to sign the lease.
A careful landlord will make sure that there is one lease, signed by all of the tenants. This means that each tenant will be responsible for the entire monthly rent. It is thus important that you are satisfied with your fellow tenants because if one just disappears, the others will have to make up the shortfall and figure out how to find the new tenant to share expenses.
2. How do you protect yourself when buying a property together?
The best way is to make sure everyone is on title. If there are two people buying it’s 50 per cent each; if four people are pooling their resources, it’s 25 per cent each. The percentages can change if people are putting in different amounts for the down payment. Before looking for a property together, buyers should visit a mortgage broker to see how much they can collectively borrow together, as everyone on title will have to sign the mortgage.
2. What happens if the partners do not get along?
It is important to have an agreement in place to provide what will happen if one party wants to sell and the others don’t, or if one party is not paying their share of expenses. It is also best to try and resolve any differences by arbitration, to avoid costly legal fees. Make sure this agreement is signed before you close any deal with your partners.
3. Do I need the landlord’s permission to replace one tenant with another?
The answer is yes, but the landlord must be reasonable in granting this permission. The landlord will likely want to do a credit check on the new tenant. Remember, just because you bring in a new tenant to replace you, you will still be responsible under the main lease if payments are not made, so make sure you find a suitable tenant as well.
4. Can a parent force a child out of the house?
On the lighter side, I was a guest on Newstalk 1010 recently and was asked about a Syracuse, N.Y. case where parents have gone to court to evict their son from the family home, because he contributes nothing and will not leave. I was asked what would happen in Ontario.
The guy sounds like a real catch, so I am not sure marrying him off would be an answer. If he had his own separate apartment in the home, it would be difficult to evict him. However, if he just had his own bedroom and shared the kitchen or bathroom with his parents, they could just treat him as a guest and lock him out. He is not a tenant. However, this might be easier said than done!