# 2 couples want to build 2 unit condo - need "memo of understanding" and financing



## Captainlabrador (Apr 25, 2013)

*2 couples want to build 2 unit condo - need "memo of understanding" and financing*

Hello there wise financial people,

4 of us are looking at building a 2 unit condo on a piece of land we bought here in Yellowknife, NWT. Not a duplex because we want to share ownership of the land and the roof-top deck and avoid a second water & sewer connection.

We were going to set ourselves up as a partnership to build the building and then sell it (at cost) to ourselves in the form of a condo corp.

But we have heard that it is better to do it as "a group of individuals" to avoid having to keep really detailed accounting of how our partnership didn't actually make any profit.

So we need a template of a "memo of understanding" that outlines how we are just a bunch of folks building homes for ourselves. We would co-own it at first and then convert it into a condo later on.

We also need a bank that understands what we are trying to do. Apparently "co-constructing" a 2 unit building does not fit very well in most banks' mortgage application forms, but 2 units is too small for the commercial side?

What do you think?

A


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## Potato (Apr 3, 2009)

Sounds to me like you're looking to spend more on the legal structure than the building structure. 

Why not simple joint ownership? I don't quite understand the objection to the duplex, either: would owning half the land be so different than a 50% stake in the whole parcel? What about continuing as a partnership/corporation that owns the building, and then renting the units?

What is the end game? If one couple wants out, how will it work for each case? What if one couple becomes unable to pay the bills? A duplex is fairly straightforward, and legally a condo might be as well, but it might be uncommon enough to scare off buyers...


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## Captainlabrador (Apr 25, 2013)

Well, hopefully not a complex legal structure. Just some friends building their homes.

The reason we don't want to subdivide is related to the geography of the lot & zoning rules. It is hard to explain without a map.

The question I have now is "will any of the major banks do a construction mortgage with 4 people"?

Andrew


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## the-royal-mail (Dec 11, 2009)

To me, whether the banks will do it is kind of a secondary point. I think we need to step back and determine if it's a good idea getting involved in something like this with FOUR people. That puts all of you at risk, if one person gets divorced or runs into financial problems of some sort. It's risky enough with one person but 4 people? Yikes. Talk about cat herding.

Of course, documentation is a must and my advice would be to contact a lawyer and have all 4 people pay upfront for the fees to draw up an agreement. That way there's something to follow if/when this ends up in court.

And then what happens when one of the people wants to move? Now you're back drawing up new agreements?

I don't think it's a good idea but it sounds like the decision's been made.


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## sharbit (Apr 26, 2012)

whats the point of forming the partnership if there's no expectation of profit?


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## hystat (Jun 18, 2010)

start at city hall - see if the area is even zoned appropriately.


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## sprocket1200 (Aug 21, 2009)

save up yourself and control your own destiny. there is no hurry right now....

unless i am the seller, or real estate agent, then , buy buy buy!!!!!



Captainlabrador said:


> Hello there wise financial people,
> 
> 4 of us are looking at building a 2 unit condo on a piece of land we bought here in Yellowknife, NWT. Not a duplex because we want to share ownership of the land and the roof-top deck and avoid a second water & sewer connection.
> 
> ...


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