# Advise when buying a new house with parents?



## exxoid (Sep 30, 2017)

Hello,

I am looking to get some advice or guidance, my parents are selling their current home so that we can buy a new house. When we buy the new house, they will be the owners on the title of the home.

I want to contribute financially when buying the new house and want to have a stake in the house, as in I want to legally own part of the house they buy.

What are some methods to accomplish this? Basically a way to craft legal documentation/papers/prenup where it states that I own the basement suite of the house when they go ahead and purchase it? Or a way to say I own 25% of the house?

That way, if all hell breaks loose down the road (they get a divorce or something crazy like that) and we sell the new house - I am secured and entitled to 25% of the price it is sold for.

Thank you.


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## OnlyMyOpinion (Sep 1, 2013)

Bad idea all round. Instead, establish goals to become independent.


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## exxoid (Sep 30, 2017)

It may be a bad idea for some, but for me and my family this is the route we want to go. I am looking for recommendations on how to legally have a stake in the house that my parents own; for one that I assist them in buying financially - so all I want to do is ensure I am also somewhat secured while they remain owners on title.


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## redsgomarching (Mar 6, 2016)

I don't understand why you would want to do this. I would recommend a new course of action as this would only complicate things unless you are willing to put up funds. 

And what do you need security for? If they divorce? Is that even likely? I apologize for being blunt but this is just silly. Work on independence by saving and investing and take advantage of the time you are able to live there. That will ensure your "security" rather than this brainless scheme.


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## Mukhang pera (Feb 26, 2016)

exxoid said:


> Hello,
> 
> I am looking to get some advice or guidance, my parents are selling their current home so that we can buy a new house. When we buy the new house, they will be the owners on the title of the home.
> 
> ...


I'll start from the proposition that you have made up your mind about this venture so I'll refrain from expressing any view as to the wisdom of what you propose. Moreover, I know nothing of you and your family and the factors that might come into play. None of that is required to answer your question.

You say they will be the "owners on the title". Is there some cogent and compelling reason why you too cannot be an owner on the title? Very simple to have you registered, for example "as to an undivided 25/100ths interest". You could be registered as a tenant in common, or if all prefer, you can be registered as joint tenants, which means the right of survivorship will apply. In that case, if one joint tenant dies, the surviving joint tenants receive automatically the share of the deceased joint tenant.

Unless the house happens to be stratified, i.e., it's a condominium development and the basement happens to be a separate unit, no, you cannot own the basement or any identifiable part of the whole. Your 25% interest will be an interest in the whole.

If there really is some good reason not to appear on title (eg, hiding assets from your creditors), about the only other way to secure your interest would be by way of some kind of unregistered trust instrument. There are other ways to achieve some form of security, but my guess is that you have not come here for a Law III course in secured transactions.

You also refer to a "prenup". I am not sure where that might come into play. Do you plan to marry your parents? These days, marriage is a rather elastic concept, so who knows?


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## OnlyMyOpinion (Sep 1, 2013)

exxoid said:


> It may be a bad idea for some, but for me and my family this is the route we want to go. I am looking for recommendations on how to legally have a stake in the house that my parents own; for one that I assist them in buying financially - so all I want to do is ensure I am also somewhat secured while they remain owners on title.


You have not provided any context to you situation, so you should expect responses that suggest this is a bad idea.
If there are circumstances that mean this makes sense in your case, then as Mukhang has noted, your share of ownership should be secured on title - simple. 
There are pitfalls to this but you may not care to hear about them.


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## AltaRed (Jun 8, 2009)

Along the lines of what Mukhang pera said, the only way I know to legally own a portion of the home is to be registered on title, and if it is for a specific percentage, then a 'divided interest', such as tenants-in-common is the only way I know how to do it within the realms of simplicity. Example: Parents 40% each and the OP 20%. 

That does provide some protection for each individual against creditor demands (partial property as compared to 100% of the property) but it also makes it harder to obtain loans such as mortages and HELOCs against that property. Indeed, it may be near impossible to secure a mortgage for a tenant-in-common title. Depending on who of the owners are more likely to get into credit/separation/divorce/libability problems, I wouldn't touch it with a 10 foot pole. 

FWIW, and I know the OP didn't ask, but other than a spouse, there is no way I would enter into a 'joint' undivided interest on a primary residence, investment property or capital property account with anyone else.


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## exxoid (Sep 30, 2017)

AltaRed and AMMukhang - thank you for your feedback; this has given me enough to think about at this time and options to explore.


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## nathan79 (Feb 21, 2011)

OnlyMyOpinion said:


> If there are circumstances that mean this makes sense in your case.


The OP doesn't mention where him and his parents live, but in some markets such arrangements may be one of the few ways for people of average income to own a home. In Metro Vancouver, for example, the median household income is just 76K, but you'd have to make close to 150K to afford the average house in the suburbs.

I've had the same discussion with my mother. She's living in an older house, and I can only afford an apartment. If we decided to pool our money we may be able to buy something decent, but we haven't made any decisions yet.

I think this kind of question will come up more often if real estate prices continue to soar and more and more people get frustrated over being priced out.


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## AltaRed (Jun 8, 2009)

nathan79 said:


> I think this kind of question will come up more often if real estate prices continue to soar and more and more people get frustrated over being priced out.


Short of the bank of 'mom and dad', you are likely right. 

I'd be surprised though if there are not 'seminars' or similar around such hot areas as TO and Vancouver that provide pros and cons of what I will call 'group' ownership. Virtually everyone that contemplates such arrangements seem to go in thinking there will not be curve balls to the personal relationships, financial crises of some kind, etc, etc. There needs to be education on the pros and cons but don't know who has the incentive to do that. Certainly the RE industry doesn't want to expose 'cons'. Lawyers might from a public lnterest perspective, but their motivations may be the litigation that could very well follow when the arrangement goes bad. There are numerous downsides (cons) to both undivided and divided titles and only one upside that I can see (ability to get into ownership).


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## lonewolf :) (Sep 13, 2016)

Remember reading when Japan peaked prices were so high mortgages were set up so unborn children & grandchildren were still paying


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## dc200 (Oct 4, 2017)

Don't do it.

My parents bought a massive house that they didn't need and I helped them pay mortgage for it over a period of 8 years. I want the house sold because I will need the money urgently within a few months from now, and they're now unwilling to sell.


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