Purchasing property with a close friend, common law spouse or other associate is increasingly becoming more popular for potential homeowners seeking the benefits of jointly attaining a house.

Among the driving factors for this trend of purchasing is the avoidance of increasing rent costs, particularly in the Corporate Area, and possibly benefiting from lower mortgage rates.

This option is especially attractive to people who think homeownership is beyond their reach due to the cost of buying and maintaining a house.

Paul Morrison, realtor associate at Keller Williams Jamaica Realty, agrees, while adding “However, most important to note, is that you share the responsibilities and the expenses, and you’re increasing your purchasing power by pooling resources.”

That combination of resources is predicated on successful communication between the parties involved, said Morrison. “I can’t stress enough that communication and transparency are important at this point — It depends on the relationship.” While married couples have legal options should the relationship sour, those protections are not necessarily available to friends and associates who have made a mutual purchase unless they have had documents drawn up by attorneys which speak to the possibilities.

“Spouses and persons close might want to do joint tenancy with the right to survivorship,” Morrison said, which would see the owned portion of one party pass to the other in the event of death. “But for a mere friend, they might want to go with tenancy in common,” he continued. That decision would see each party jointly own the property, with their respective share being transferable to anyone of their choosing.

To ensure all expectations of the involved parties are clearly defined, Morrison makes this suggestion. “I would also recommend establishing an operating agreement that clearly defines the roles and responsibilities of each partner and or management companies, and other parties that may be involved. This would best be discussed with your new business partner and your attorneys.”

The operating agreement would govern the roles and responsibilities of the involved individuals and serve as a reference by which the property is managed “in a way that suits the specific needs of the owners. Once the document is signed by the owners, it acts as an official contract binding them to its terms”, he said.

As with most business ventures, there is risk involved which should give one pause before opting for such an arrangement. If a party does not live up to their end of the deal, then this could likely affect their debt-to-payment ratio, he said. What’s more, “concerning mortgage payments, they need to understand that their liability is joint, and so if one does not honour their part of the obligation they could lose the property if the mortgage is not serviced”.

It should be noted though that there are still avenues available if there is a change of mind on either end. Referring to the agreement which should include an exit clause, he said, “if one party wants to sell, then the other party has the first right of refusal, or possibly sell the property in question and split the funds based on the agreed sum.”

While a ‘BFF purchase’ may not be for everyone, it is a viable possibility for those seeking to purchase but who may have difficulties doing this on their own. Even with common law couples things could go south, and one should always ensure they are covered for any eventualities — and in that situation, it’s always best to just get it in writing!

— Paul Allen