Can I Buy a Home With a Friend or Sibling in British Columbia?

Buying a home with a friend or a sibling can make ownership affordable. It also puts you in a legal relationship where the rules on money, decisions and what happens when one of you wants out depend on how you hold title and on court-based remedies, such as partition or sale of the land and relief for a co-owner who has paid more than their share.

This article explains how title can be held, what a co-ownership agreement should cover, where mortgages and tax costs can surprise you, and how an exit usually works. It is general information, so talk to a lawyer before you sign.

This article covers the law of British Columbia.

How you can hold title together

When land is transferred to two or more people in British Columbia, they are tenants in common unless the transfer document shows a contrary intention. If the document does not state each person's interest, the interests are presumed to be equal. Tenants in common can hold unequal shares only if the shares are stated.

A true joint tenancy needs identical interests, with the four unities of title, time, possession and interest. When a joint tenant dies, the right of survivorship passes the interest to the surviving owner or owners. A person who holds as a trustee does not create a true joint tenancy.

For two unrelated owners who contribute different amounts, stating the shares on title is one way to reflect that. For example, a registered split can be 1/4 and 3/4. Whether a joint tenancy suits you depends on whether you want your share to go to the other owner rather than to your own family.

What a co-ownership agreement should cover

Title shows who owns the property, but it does not say who pays what or what happens if plans change. A written agreement fills that gap. It is a contract between you, so having each owner get their own legal advice on it is wise.

• Each person's share and how it was set, including the down payment and later contributions
• Who pays the mortgage, property tax, insurance, utilities and repairs
• Who lives in the home, and whether rooms or suites can be rented
• How major decisions are made and how disagreements get resolved
• What happens if someone cannot pay their share
• How the home is valued and how long the others have to buy out a leaving owner
• What happens if an owner dies, marries or goes bankrupt

Mortgages, debts and tax costs

Lenders set their own terms for who is responsible for a mortgage and whether they must consent to title changes. Read the mortgage documents closely, and ask a lawyer how liability works before you sign, because it can affect each owner personally.

Joint tenancy has some special rules. The land title registrar requires severance as a condition of registering a mortgage by one joint tenant of their own interest. A mortgage of your own interest and an assignment in bankruptcy are also severing events. Registering a judgment against one joint tenant does not sever the joint tenancy, and if that person dies the survivor takes free of the judgment.

Property transfer tax can also matter. Siblings are not on the Property Transfer Tax Act's list of related individuals. When someone is added to title, an exemption is claimed only on the part of the interest coming from related individuals, and tax is payable on any interest acquired from an unrelated owner. A transfer of a family farm to a sibling or a sibling's spouse is exempt under code 07 if the farm conditions are met, so siblings qualify only for that farm exemption and not the general principal residence one. How this applies to your purchase depends on your situation, so it is worth confirming with a tax advisor.

If one of you wants out or dies

Registered owners may make a direct transfer to one or more of their number. A joint tenant may transfer their interest to themselves, which has the same severing effect as a transfer to a stranger and turns that share into a tenancy in common. A buyout between owners is often the simplest exit, and your agreement can set the price method in advance.

If you cannot agree, joint tenants and tenants in common may be compelled to partition or sell the land under the Partition of Property Act. If interested parties holding at least half the property request a sale, the court must order one unless it sees good reason to the contrary. A co-owner who has paid more than their share may apply to the Supreme Court for relief, and the court may order the defaulting owner's interest sold.

On death, a joint tenancy passes to the survivor, but where owners are tenants in common the deceased's interest vests in the personal representative. If there are more than two joint tenants, the survivors continue to hold as joint tenants after one dies. A below-market sale between non-arm's length parties is treated for federal tax purposes as made at fair market value.

What to do next

• Decide whether you want a tenancy in common with stated shares or a joint tenancy
• Have a lawyer draft the co-ownership agreement before you complete the purchase
• Ask your lender how liability and title changes are handled
• Ask an accountant or lawyer about property transfer tax and federal tax on any later transfer
• Review your wills, since title type affects what your family receives

Frequently asked questions