Co-Ownership Agreements for Ontario Real Estate: What to Include and Why You Need One

More Ontarians are buying property with friends, siblings, or business partners to make homeownership financially possible. Co-purchasing can be a smart strategy — but without a written co-ownership agreement, it is also a common source of serious disputes.

A co-ownership agreement (sometimes called a co-tenancy agreement or a co-habitation property agreement) is a private contract between co-owners that governs the relationship during ownership and addresses what happens when it ends. If you are buying with someone who is not your spouse, you need one before you close.

Why the Default Rules Are Not Enough

Ontario's property law provides a thin framework for co-owners. Without an agreement:

• Any co-owner can apply to court to force a sale (a partition action) at almost any time.
• There is no automatic buyout mechanism.
• Cost-sharing disputes have no contractual resolution process.
• If one co-owner dies, their share passes through their estate — and their estate's beneficiaries become your new co-owners.

The default rules protect legal rights but do not reflect what most co-owners actually want. A written agreement fills the gap.

Who Uses Co-Ownership Agreements

• Friends buying together as a pathway to ownership they could not afford alone.
• Adult siblings inheriting a property and deciding to keep it rather than sell.
• Investors purchasing rental property as a joint venture.
• Parent and child buying together where the parent's name is needed for mortgage qualification.
• Unmarried couples who want clear rules that are distinct from the family law regime that applies to married spouses.

Key Provisions Every Co-Ownership Agreement Should Address

1. Ownership Shares and Contributions

State clearly what percentage each co-owner holds. If the contributions were unequal — one person provided a larger down payment, for example — the agreement should reflect that and specify whether the unequal contribution is an equity stake or a loan to be repaid.

2. Ongoing Cost Sharing

Who pays what, in what proportion, and how?

• Mortgage payments (principal and interest)
• Property taxes
• Insurance
• Maintenance and routine repairs
• Major capital expenditures
• Utilities (if the co-owners are living together)

The agreement should also address what happens if one co-owner falls behind on their share of expenses.

3. Decision-Making and Dispute Resolution

Agree in advance on how decisions get made. Routine decisions (hiring a plumber, painting) might require only one owner's approval. Major decisions (renovating, renting out the property, selling) should require unanimous agreement. Specify a dispute resolution mechanism — commonly a mediation step before any court application.

4. Buyout Rights and Process

The agreement should address the most common exit scenario: one co-owner wants out. Typical provisions include:

• Right of first refusal: if a co-owner wants to sell their share, the other co-owner(s) have the right to purchase it at the same price before any outside party can.
• Buyout valuation: how is the share priced? By agreement? By independent appraisal? By a formula?
• Timeline: how long does the non-selling co-owner have to decide whether to buy?
• Forced sale fallback: if the remaining co-owner cannot or will not buy the departing owner's share, does the whole property go to market?

5. What Happens If One Co-Owner Dies

Without an agreement, the deceased co-owner's share goes to their estate — and their beneficiaries become your co-owners. An agreement can address this by:

• Giving the surviving co-owner an option to purchase the deceased's share from the estate at fair market value.
• Requiring the estate to cooperate with a sale if the surviving co-owner cannot buy.
• Specifying a timeline so the estate is not tied up indefinitely.

Note that an option to purchase in the co-ownership agreement does not override the deceased's will — it creates a contractual obligation binding on the estate. Structuring this correctly requires a lawyer.

6. Mortgage Default

If one co-owner stops contributing to mortgage payments, the whole mortgage may be at risk. The agreement should address:

• Notice obligations to the other co-owner before missing a payment.
• The right of the complying co-owner to make the payment on behalf of the defaulting co-owner and recover it as a debt.
• Accelerated buyout rights triggered by a default.

7. Renting Out the Property (or a Portion of It)

If the property is — or might become — a rental, the agreement should specify whether one co-owner can rent their portion without the other's consent, how rental income is split, and how tenancy decisions are made.

Registering the Agreement on Title

A co-ownership agreement is a private contract between the parties. It does not automatically bind third parties (like a purchaser of one co-owner's share). To give greater protection, some co-ownership agreements are structured with provisions that are registered on title as a restriction or a right of first refusal notice.

This is more common in commercial co-ownership arrangements. Your lawyer can advise whether registration makes sense in your case.

When to Get the Agreement

Before closing, ideally. The time to negotiate a co-ownership agreement is when the relationship is good and everyone is aligned on goals. Trying to add terms after closing — or after a dispute arises — is far harder and less likely to result in a balanced agreement.

Frequently asked questions