Which Tenancy When Buying With A Partner?

Buying a home can be done under two types of residential sales contracts. Each has some similarities, but it is the differences that need to be understood when deciding which way to go.

Most married couples opt for joint tenancy (although either option is available to them) yet they may not realize that they automatically ‘fit’ the rules that must apply to joint tenancy. These conditions may affect your choice of contract as they involve extensive ‘togetherness’!

For instance, the four main points are: you automatically will have an equal interest; you both gain simultaneous possession; the home ownership is granted in the same document and from the same person (seller); title is assumed at the same time.

If you can meet all those requirements and are still wondering which one, here is a biggie: you cannot bequeath your share in the property to anyone – it automatically goes to the other owner.

Choosing to buy a house with a partner usually results from financial need or the hope to make financial profit. Benefits of sharing such as companionship, shared repairs, shared running costs and security often take second place.

In some cases the property is a resort property and can easily be ‘shared’. This often happens with ‘snowbird’ homes; it is bought jointly and one couple use it for October, November, December while the other couple use it for January, February and March.

A partnership to buy a home can be far easier to get into than to get out of. The three main problems that can turn the dream into a nightmare are: incompatibility, changes in one partner’s personal finances or changes by one partner to the original arrangement (e.g. moving in a friend etc.).

Hopefully you will talk about how things may unfold before you enter into anything. For instance, you will ensure that you have the same short term and long term goals as your partner, and that your objectives and methods will be compatible. How compatible are both lifestyles? Study a sample contract for joint ownership and see which clauses, if any, seem disagreeable to either of you and why.

If you are unsure about off-loading all your hard-earned cash into a joint venture, there is another alternative. You could try renting part of your home to a tenant; tenants can be given notice, co-owners can’t!

Banks will often ‘allow’ rental income to be included into your overall annual salary. It is not allowed at full rate; sometimes 40% of the rent is added to your total for a loan. This means that you could see how you enjoy having to share with someone else before you bite the bullet!

Leave a Reply