In a recent article in The Globe and Mail, reporter Brenda Bouw discusses the advantages – and potential disadvantages – of co-owning a cottage with family members. In reviewing the possible ownership structures, she turns to Janet Sim, Osler partner and head of the firm’s Trusts and Estates Group, for her expert advice.
Janet suggests that families who are buying a cottage together consider one of three ownership options: one family member owns the property and has an arrangement with the other family members for using the property and paying for that use; two or more family members own the property as joint tenants; or two or more family members own the property as tenants-in-common, where the interests don’t need to be equal and each owner can specify in their will how their interest should be disposed of upon their death. Janet emphasizes the importance of setting out how cottage interests can be dealt with in a co-ownership agreement that family members negotiate and sign when they purchase the property. For instance, they could agree on surviving owners having the first right to buy the interest of an owner who passes away.
She also recommends that there be rules around what happens if a family member wants out of the arrangement before any of the owners passes away. “A first right of refusal in favour of the other owners could be stated to apply to this situation as well,” Janet explains.
If you subscribe to The Globe and Mail, you can learn more by reading Brenda Bouw’s full article “The feud-free way to co-own a cottage with your family” from June 19, 2018.