Ontario’s Conservative government has revealed a new weapon in its battle against the province’s suffocating housing shortage: co-ownership. But as far as weapons to be deployed against formidable foes go, this one is the rough equivalent of parachuting into Libya with a picnic basket full of water balloons.
The Conservatives’ 16-page Co-Ownership Guide, released on December 11, paints a rosy picture of both co-ownership and co-habitation as ways to improve affordability, “maximize the space available in larger houses and heritage properties”, and “establish a community environment”.
While these goals are admirable, the guide is light on details, heavy on generalities, and devoid of any discussion around the conflicts that frequently plague such intimate financial relationships. Few Ontarians are prepared for the unique challenges, both personal and legal, that accompany co-ownership. Encouraging them to pursue such a poorly understood and infrequently deployed strategy could be grossly irresponsible on the part of the government.
“Homeownership is difficult as is,” says Bosley Real Estate’s David Fleming. “Who’s going to help these people through the process of resolving conflicts and ultimately suing each other? Do they know what a shotgun clause is? None of these people are equipped to deal with the responsibility of co-ownership. How could they be? No one’s taught this in school. No one’s taught this in university.”
The Co-Ownership Guide does attempt to fill in some knowledge gaps. It defines a number of useful terms and touches briefly on what a co-ownership agreement should include, but there is no mention of conflict resolution or the severe financial pitfalls involved.
“If two families own a house and one family gets transferred to Nunavut and they have to sell their house, what if the other family says, ‘No, I don’t want to’? Then what, you sue each other?” Fleming asks.
Implications for agents
With the potential for disagreements – over maintenance duties, over the use of the property, over what tenant to rent to – baked into co-ownership, Fleming feels realtors faced with such a situation have to take their relationship-building skills to another level to ensure that all parties involved understand, and accept explicitly, each other’s roles, responsibilities and desires.
“It’s complicated on the buy side,” he says. “Now your job is more about managing emotions, sensitivities, relationships.” Fleming encourages agents entering a co-ownership transaction to identify which group member appears to have most of the decision-making clout and direct their efforts accordingly.
Some consumers, however, will never have the financial literacy, maturity or disposition required for co-ownership. In those cases, agents must be honest, steer their clients away from co-ownership and provide an alternative solution.
“It’s not going to look good for me if they call up in eight months saying it was a terrible idea,” Fleming says.
Because of the complexities involved with co-ownership, this new addition to the government’s arsenal seems, like most weapons, destined to cause more problems than it will solve. Fleming doesn’t see it becoming a trend any time soon.
“You call me on December 31,” he says. “I’ll bet you the number of transactions I’ve done for co-ownerships is zero. The number of inquiries I’ll have had – also zero. Maybe one. We’ll set the over-under at 0.5.”