Three Friends, One Condo: Drafting the Exit Before the Purchase

The situation

Karim, a plumber, and Samir, an electrician, had been friends since trade school. Ifrah, who worked with Karim on and off through a shared network of contractors, joined the conversation when the two of them started looking at condos in Ancaster and realized that buying alone, on their incomes, meant settling for something smaller than any of them wanted. Splitting a purchase three ways changed the math. A two-bedroom unit with a den, priced at roughly $640,000, became affordable once each of them was contributing a share of the down payment and qualifying jointly for the mortgage.

They found a unit they liked within a few weeks and were ready to submit an offer. Their plan, as they described it to our team on an initial call, was straightforward: buy the condo as joint tenants, split the mortgage and condo fees three ways, and figure out the rest as it came up. None of them had bought property with someone who was not a spouse before, and none of them had thought much past the closing date.

What a handshake purchase leaves unanswered

Buying real estate with a friend is legally no different from buying it with a stranger, once the deal is signed. Ontario law lets unmarried co-owners hold title as either joint tenants or tenants in common, and the choice matters. Joint tenancy carries a right of survivorship — if one owner dies, their share passes automatically to the surviving owners, not through their estate. Tenants in common each hold a distinct, separately transferable share, which can be willed to someone else entirely. Karim, Samir and Ifrah had not discussed which structure they wanted, or what either one meant in practice.

More pressing than the title question was what would happen if one of them needed out. People's circumstances change. A job relocation, a marriage, a falling-out, or simply one owner deciding they would rather have their equity back in cash — any of these could leave the remaining two owners needing to buy out a third, sell the unit outright, or find a new co-owner to bring in. Without an agreement, Ontario's default remedy for co-owners who cannot agree is an application to the Superior Court for partition or sale of the property. That process is slow, adversarial, and expensive, and it can force a sale on a timeline and at a price none of the owners would have chosen. It also does nothing to resolve smaller, more common frictions: what happens if one owner falls behind on their share of the mortgage, who decides whether to renovate the kitchen, or whether an owner can rent out their bedroom to someone the others have never met.

None of these questions had come up between the three of them, not because they were avoiding the topic, but because it had simply not occurred to them that a written agreement was something people in their position needed. They assumed that being friends and being clear with each other verbally would be enough.

What we did

1. Recommended a co-ownership agreement before the agreement of purchase and sale became firm. We advised the three of them to put a co-ownership agreement in place alongside the purchase itself, rather than treating it as something to sort out later. Drafting it before closing meant every term could be negotiated calmly, while all three still had equal leverage and no one had yet moved in.
2. Set out ownership shares and how they would be held. Because Karim and Samir were each contributing a larger share of the down payment than Ifrah, we recorded their ownership as tenants in common in unequal shares reflecting actual contributions, rather than as joint tenants in equal thirds. This meant each owner's share could be individually willed or sold, and the split reflected what each person had actually put in.
3. Built in a buyout mechanism with a defined valuation method. The agreement set out how a departing owner's share would be valued — an independent appraisal, split between the parties — and gave the remaining owners a right of first refusal to buy out that share before the unit could be listed for sale to anyone else, with a set period to arrange financing.
4. Addressed the routine friction points directly. We included terms on how a missed mortgage or condo fee payment by one owner would be handled, how major decisions like renovations or refinancing would be approved, and whether an owner could rent out a room or their entire share of the unit without the others' consent.
5. Set a process for a full sale. Rather than leaving a disagreement about selling to escalate into litigation, the agreement specified that if two of the three owners wanted to sell and one did not, the property would be listed after a defined waiting period, with the dissenting owner given a further chance to buy the others out first.
6. Coordinated the agreement with the mortgage and title documents. Lenders qualifying three unrelated borrowers on one mortgage want to see how liability is allocated among them, and we made sure the co-ownership agreement's terms did not conflict with the mortgage commitment or the way title was ultimately registered.

The outcome

The purchase closed on schedule, with the co-ownership agreement signed alongside the closing documents. No dispute followed from any of this — that was the point. Karim, Samir and Ifrah moved into the condo with a document in a drawer that none of them expected to need soon, but that each of them understood, having gone through every clause together during drafting rather than skimming it at closing.

The value showed up about eighteen months later, when Ifrah's circumstances changed and she needed to relocate for a new position. Because the buyout mechanism, valuation method and timeline were already agreed, what could have been a stressful negotiation over an estimated $210,000 share of the equity instead followed the steps the three of them had signed off on years earlier. An appraisal was ordered, Karim and Samir exercised their right of first refusal, financing was arranged within the agreed window, and Ifrah's share was bought out without a single disagreement about the process itself. The only conversation left was a friendly one about moving logistics.

Had the three of them proceeded on a handshake, as they originally planned, the same event could have played out very differently. Without a defined valuation method, the three could easily have disagreed on what the unit was worth after eighteen months of a moving market. Without a right of first refusal and a financing window already agreed, Karim and Samir might have scrambled to qualify for a new mortgage on short notice while Ifrah pushed for a faster resolution. In the worst case, a disagreement of that kind ends in an application to the Superior Court for partition or sale, forcing a listing on a timeline none of the three would have chosen, with legal costs on both sides eating into the equity everyone was trying to protect. Instead, the agreement did exactly the job it was written for: it turned a life change into an administrative step rather than a falling-out between three people who had been friends for years before they became co-owners.

What you can learn from this