Would you purchase real estate with a stranger?
While many prospective buyers would likely balk at the concept, an online listing offering “undivided half-interest” in a 2,992-square-foot home in B.C.’s Lower Mainland for $750,000 might give some a moment’s pause.
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The property on Richmond’s Lockhart Road has five bedrooms, five bathrooms, two fireplaces and a two-car garage, although even the listing on Realtor.ca acknowledges the purchasing arrangement would be out of the ordinary.
“Yes, unusual it is,” the property description reads.
The listing, which has been up for 170 days, also urges would-be purchasers to do their homework, asking them to consider questions like, “Who would I be sharing ownership with?” and “Does the other half want to sell?”
“WE DO NOT KNOW THESE ANSWERS,” the listing adds in all-caps. “Please call your Realtor and ask for the explanation with documents posted.”
While strangers sharing real estate is exceptionally rare, family members and close friends co-owning property is becoming more and more common, according to lawyer Richard Bell, who pointed to astronomical home prices in many B.C. communities as a driving factor.
“It’s too expensive for people to buy on their own, so they start looking for sharing opportunities,” Bell told CTV News. “Affordability is a great word, but pretty tough to find it in the major centres, and even the smaller centres.”
There are currently no single-family homes in Metro Vancouver listed for less than $1 million, and none of the ones listed for $1.5 million have five bedrooms and five bathrooms.
The Lockhart Road property was most recently assessed at $2.1 million – though whether that makes the asking price of $750,000 for half-interest an appealing deal depends, in part, on the answers to the many unanswered questions posed in the listing.
CTV News reached out to the Realtor representing the home for more information, but has not heard back.
A listing for a Richmond, B.C., property offers undivided half-interest in a five-bedroom, five-bathroom home for $750,000. (Realtor.ca)
Generally speaking, Bell said, the key to any co-ownership arrangement is to consider as many potential circumstances as possible.
For example, if two couples are choosing to purchase a home together, they should first agree on what would happen if one of the couples were to separate or move away.
“What happens if someone has to sell? Is there a process where they have agreed, in a contract, to engage in meetings with the new potential buyers? Is there an approval process, like in a co-op situation?” said Bell.
“This is an arrangement where people are committing to something that’s significantly different from what they’ve grown up with, apart from maybe sharing a place when they’re in university, which is a different story.”
There can also be issues around financing. Bell noted that no matter how much money each buyer contributes to the down payment, the owners’ names will all be on the mortgage – and the lender will consider each of them 100 per cent liable for the balance.
“Most people will say, ‘OK, I’m going to have a mortgage for $500,000 and you’re going to have one for $750,000.’ But really, you’re both going to be liable for $1.25 million,” said Bell.
Carrying that debt could impact an owner’s ability to finance a new vehicle, or even apply for a new credit card, the lawyer added.
But despite the potential complications, Bell said shared ownership can be a great way to break into the real estate market. In fact, he shares his home in Vancouver’s Mount Pleasant neighbourhood with all of his children under just such an arrangement – which was a dream of his wife’s before she died of cancer four years ago.
Bell is also the chair of Small Housing, a non-profit that has been advising the B.C. government on how to bring “gentle density” into neighbourhoods largely made up of single-family homes.
He said the province’s recent move to reduce zoning barriers in cities – allowing for single-family homes to be broken into multiple units – is a step in the right direction, noting that a stratified property can allow each buyer to obtain their own mortgage, reducing the potential for sticky situations.
“Co-ownership is a solution that works in a number of situations, stratification would be much better in others,” Bell said. “And we’ll see that unfold over the near future with what the province is doing and with what some municipalities are doing.”