How Property Co-Ownership Impacts Mortgage Financing & Estate Planning

Have you ever considered co-owning a property? What is the difference between owning your own property or co-owning with a friend or family member? Is the process different? Read more about property co-ownership in Alberta and whether or not this is the right choice for you.

Property Co-Ownership In Alberta At A Glance

• If a property is co-owned as tenants in common & one of the owners dies, their heirs will be entitled to their share of the property with taxes accrued.

• When an owner dies & the property is held as joint tenants, the deceased’s share automatically transfers to the remaining owners on title tax-free.

• Co-ownership of a property with a third party prevents spousal claims of use & occupancy related to dower in Alberta.

• Special financing or ownership agreements may be required for a co-owned property. 

Should You Co-Own As Joint Tenants Or Tenants In Common? 

In Canada, real estate titles are registered on public record. The title can be held solo or co-owned as joint tenants or tenants in common.

Joint tenants have the right of survivorship

That means if one of the property co-owners dies, the other owners inherit their share equally. Typically if the property was the deceased’s primary residence, no taxes would accrue for this transfer. This is normally how spouses choose to co-own property. 

Tenants in common can will their share to heirs

Co-owners of this kind should remember to include real estate in their will. If there is no last will and testament in place, then a deceased co-owner’s share of a property in Calgary will be divided according to the intestacy laws in Alberta. People tend to be tenants in common with extended family, friends and small business partners. This allows all co-owners to choose who to benefit when they die, rather than giving their share to the other owners. 

It is no longer possible to co-sign on a mortgage for a friend or family member to help them qualify. Instead, the co-signer is normally a 1% or more co-owner as a tenant in common. Property co-ownership makes the banks feel more secure about their recourse for bad loans. This is why you can get higher mortgage approvals with a co-owner. 

Property Co-Ownership Mortgages & Condominiums

Property Co-Ownership is an alternative to condo ownership. However, this can require more complex funding arrangements.

In a condominium development, individual units are owned and mortgaged by unrelated individual owners. Therefore, these condo units qualify for a typical condo mortgage.

In a co-ownership development, the entire building is co-owned by unrelated individuals. The owners write an agreement delegating the use of particular units to particular co-owners. In this scenario, a special bank that funds co-ownership mortgages for unrelated persons may be required for each co-owner’s interests.

Searching for a bank to fund such a co-ownership development project would be time-consuming and difficult on your own. You would also have no means of knowing if you got the best interest rate and terms. In these cases, finding a mortgage associate to help you find the best mortgage rates is essential.

Co-Ownership & Dowry Legislation In Alberta

Dowry legislation in Alberta protects married people from being dispossessed of their homes by an estranged spouse. However, this law does not apply to people who are common law.

If a house in Alberta is owned in the sole name of one married spouse, and either spouse lived in the home during the marriage, it qualifies as a dowry home. Neither spouse is allowed to be excluded from a dowry home. Selling or refinancing a dowry home requires the spouse’s consent that is not on the title.

Houses co-owned with third parties are not dowry homes. If a spouse co-owns the property with another person who is not their spouse, there are no dowers rights accrued to the spouse’s portion of the property.

Property co-ownership with extended family, friends and business partners can be useful if you wish to keep that specific real estate outside the dowers rights of a spouse.

How To Get The Best Mortgage Rates In Calgary On Co-Owned Property 

Mortgage associates at The Mortgage Group Inc are specially trained professionals who have experience brokering property co-ownership mortgages, condo mortgages and traditional mortgages in Calgary, Alberta.

Please contact us to get a mortgage quote related to your co-owned property or pre-approval during your property search. We will get you the best mortgage rates and terms available in Calgary, Alberta.