# Options for Joint Purchases for Housing Relatives



## parentminder (May 11, 2012)

My situation: My siblings and I are planning for the eventuality that we will need to help house our elderly dad. From our own personal situations, the best option seems to be to jointly purchase an apartment for the relative to live in. We'd all rather see our money going into a principal rather than into a black hole of rent. Our dad has had money troubles in the past and we'd like to avoid at all costs seeing his name put to the title. This might be six months or a year down the road, but it seems like the inevitable.

We will each have enough for a healthy down-payment (>30%), but will require financing of some sort. The siblings all do well with good paying jobs, but we're busy carrying our own mortgages and trying to also save for retirement.

I've spent quite a bit of time reading various sources learning all about joint ownership and tenancy-in-common, trying to research various options. Trying to figure out this idea (joint property ownership by non-resident owners with a relative tenant) seems to be closest to the idea of trying to jointly purchase investment property. 

So questions I have for the experts here on this forum:

1.) Who should I try talking to first to get some expert advice? A mortgage broker? A financial adviser? A personal accountant? A lawyer?

2.) Does anyone have any links or resources to recommend that might be useful?

3.) Any armchair recommendations on particular legal (set up a trust? corporation? tenants-in-common?), financial (e.g. mortgage types), or other considerations?


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## OhGreatGuru (May 24, 2009)

Aside from the thought that it might be a lot easier to just pay his rent:

I would talk to a mortgage broker & a lawyer.

The broker because this is not a principal residence, so both interest rates and down payment requirement may be much different from a principal residence. And it sounds like you can't rely on any income from your father to cover the mortgage.

The lawyer because I'm pretty sure you and your siblings will be jointly and severally liable for the mortgage. So you need some kind of binding agreement between you to deal with what happens if any party is unable or unwilling to make their monthly payments. You may also need provisions on how to terminate the agreement; how to "buy out" one member if it becomes necessary; how to agree on selling; how to account for unequal contributions towards either downpayment or mortgage; etc. It's really a partnership agreement you are entering into.

PS. I don't know enough about trusts to say if that's feasible in this case. But your lawyer can tell you.


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## MoneyGal (Apr 24, 2009)

In this situation I would rent. However, if you are determined to buy a large, illiquid asset with multiple owners, all of whom have pressures on their income and different financial and family situations, I would talk to a lawyer and an accountant to start, and only approach a mortgage broker after you've worked out the legal arrangements (and you are clear on the tax implications). Ideally you will all get separate legal representation and it actually protects YOU if you ensure each sibling has a separate lawyer vet the deal.


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## Berubeland (Sep 6, 2009)

In a flat market, it will take five years of regular payments to pay enough principal down to pay the realtor and closing costs on a condo. 

This ignores the usual condo risk which is special assessments and skyrocketing maintenance fees. 

It is generally quite a bit cheaper to rent than to buy even in the same building. 

For example I manage 3 condos at Sherway Gardens. Owner put down 25% and has been paying down the mortgage for 4 years. The tenants pay $1200 per month. The places currently cost around $1400 per month with taxes and maintenance fees and the owner bought preconstruction and paid about 80K less than the current listing price. 

His plan is to hold for 25 years so no problem. 

If you move your dad in there how long are you planning to hold the place? What if things go wrong? Personally I'd rent him a place.


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## MoneyGal (Apr 24, 2009)

The other issue is - what if dad needs long-term care? It is easy to move him from a rented apartment to a long-term care home, and (depending on the route you go) his lack of assets isn't necessarily any problem. But if dad needs long-term care and all your cashflow is tied up in paying mortgage principal, you have fewer options.


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## crazyjackcsa (Aug 8, 2010)

MoneyGal and Berubeland covered most of what I was going to say, a lot nicer than I was going to say it. This whole plan does have train wreck written all over it though.


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## parentminder (May 11, 2012)

I understand that it would be a lot easier legally and financially to simply pay his rent. Part of this comes from the family dynamic. He's had very bad experiences with landlords in the past, having twice been forced out of a place due to things like the owner selling or wanting to live in the unit.

By elderly, he's not that elderly. He'll reach 65 in a year. He may be able to help with a token amount to help cover strata/taxes. We could easily be housing him for 20 years. Other than some mobility issues, he has no looming health problems. It's more of a personal matter that the whole idea of owning helps solve: providing stability by removing the landlord from the picture and also by locking down the financial commitment involved.

Rental prices are steep here, and even in the past year, comparable rents have gone from $1000 to $1100.

I guess this is more akin to wishing to acquire property for security and peace of mind, not as necessarily a way to make money. The cash-flow commitment is fixed, although there is yes, some risk exposure to something like an assessment.

Thank you for the advice everyone, I appreciate it, even from those of you who think it's a terrible idea.


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## kcowan (Jul 1, 2010)

Let me add my vote to the terrible idea. 

If he must purchase why don't you each gift him the money he needs? Then at least he is dealing with all the crap and you can inherit it all back later on. If he moves to LTC, consider it your contribution to the people of Canada!

This is a really good example of the bad decisions that come from the crappy advice about owning something.

(BTW I will be 70 this year and would never burden my kids with this kind of bad situation. I would insist on renting.)


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## OhGreatGuru (May 24, 2009)

kcowan said:


> ...
> If he must purchase why don't you each gift him the money he needs? ...


You didn't read this part in OP's initial post:

*Our dad has had money troubles in the past and we'd like to avoid at all costs seeing his name put to the title.*


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