Here’s how you can protect yourself if you’re buying with someone else.

Before I get into how to protect yourself when buying real estate with others. I first want to mention a situation where you won’t need additional protection. If you’re married and you purchase a house with your partner, the marriage license will have all the protection mechanisms in place that you might need.

However, here in Quebec, it’s quite common for couples who aren’t married to purchase a house together. Unfortunately, the common law protection people think they have doesn’t really exist. There’s no automatic protection mechanism for you if you’re unmarried.

Here’s an example of a bad situation that could happen: You and a romantic partner purchase a house together, and you each own half. Then your partner, unfortunately, passes away. In this case, the civil code of Quebec stipulates that your partner’s heirs get the other half of the house, not you. Their heirs could be parents, siblings, or kids from a previous relationship. You might end up owning a house with someone you don’t even know.

Here’s another example. Another couple buys a house together, with one partner putting down all of the down payment. Let’s say the relationship doesn’t work out, and you have to sell. How do you split the proceeds? Is it split in half? Does the one who paid the down payment get their money back?

“You might end up owning a house with someone you don’t know.”

To avoid any of these problems, you need to have a written will. You can name whoever you want to take over your assets. In the case of a romantic couple, you can name your partner in writing to alleviate most of the problems.

Investors can run into this problem as well. I see a lot of pairs of friends who buy a two-unit building, and each lives in separate units. It increases your purchasing power, but the reality is that you both own 50% of each unit, not 50% of the building. If one of you wants to sell or a major repair needs to be done, you’re stuck between a rock and a hard place. 

Who pays for repairs? Even if it’s not your unit, you would be responsible for half of the repair costs. The way around this is by filing an indivision agreement that stipulates exactly what’s exclusive to each unit and what is common. Then if there is a major repair, you would refer to the agreement and avoid any legal issues.

Finally, let’s say a couple of people buy a piece of real estate together. They have no intention of living in it, but they want to rent it out together. What happens if a repair is needed, but one of the partners doesn’t have the funds. Who pays for them? Avoid this by filing an indivision agreement that stipulates exactly what would happen in that case. If you’re buying a property through a corporate holding, you would have a shareholder’s agreement that would stipulate the same type of things.

I’m not the right person to help you with this, but I can point you in the right direction. We work with the best every day, and I’d be happy to answer any questions you have about this topic or real estate in general. I look forward to hearing from you soon.