If you’re not lucky enough to have a generational cottage in your family, you may have considered investing in one yourself. While there are many perks to cottage ownership — the ability to spend weekends at the lake after a busy week in the city, just for starters — it can also be quite costly and time-consuming. Old or remote cottages will need regular maintenance or more significant renovation projects from time to time. 

If you’re single or you’re living on a budget, spending a significant amount of money each month in a space you get to use only intermittently can feel daunting, overwhelming, and frankly, unfeasible. In Ontario, Canada, the prices of recreational properties — like cottages — increased by 13% in 2022, and in 2021 cottage prices increased by 34.6%. With these figures in mind, you may have written the idea of cottage ownership off entirely. 

There is a way to still own a holiday home without shouldering the financial burden solely: joint cottage ownership with a group of friends or close family members. 

Joint ownership is a fantastic way for everyone to get their foot on the recreational property ladder; it’s also a way to share costs and responsibilities while everyone can enjoy the luxury of owning a second property. 

There may even be room for recouping mortgage costs by renting the space out occasionally through property management companies. Working with a property management team is an expedient way to list your space while removing extensive marketing challenges and time constraints. For example, many Ontarians look for Ontario cottage rentals from RentCottage.com when listing — or renting — getaways.

Lay Out Legalities in a Contract

While it’s easy to get carried away with the benefits of co-ownership, it’s important for everyone involved to treat large purchases like this as a legal transaction. A thoroughly considered contract will protect everyone involved in any eventuality.

In addition to researching and understanding existing rules and regulations for co-ownership in your region, here are a few necessities to include in your property co-ownership contract and a few things to consider, including:

• realizing the importance of financial transparency,
• looking ahead to a move out plan, and,
• organizing an annual meet up.

Trust Your Instincts

It’s easy to get caught up in the excitement of owning a property with friends or family — especially if the one spearheading the idea is convincing. That said, trust your instincts. If someone is notoriously flagrant with money or consistently switching jobs or devising schemes, they may not be the best person to get into a long-term financial commitment with.

Be cautious who you go into business with, as you want to be confident in their financial responsibility. After all, you will be responsible for every missed mortgage payment. 

Visit a Lawyer Before Closing

Before buying a cottage, you need to make sure all potential owners are on the same page — make sure that you have a sound legal contract drawn up before any money officially changes hands. 

Don’t do this last minute or after you've put in an offer. Considerations will need to be made, and accommodations acknowledged — both take time and should not be rushed.

Financial Transparency Is Key

Since all parties involved in the purchase will need to show mortgage lenders that they can afford the cottage (in addition to any independently owned properties), financial transparency is key. 

If one person has a poor credit rating, this can have a detrimental effect on everyone in the mortgage terms. A poor credit rating can affect the interest rate on the loan, which can make a big difference for everyone’s monthly payments and may even affect your own personal credit rating score.

Have a Move Out Plan

One important item for inclusion in your legal contract is putting a plan in place should one or more co-owner want to sell their share of the property. 

Since all names are on the mortgage, you may need to refinance the space under the names of the remaining owners — and hope that the remaining parties can cover the mortgage now that you’re ‘down’ a person. Or, you may wish to buy out the person who wants to leave if you're in a position to do so or sell the property.

Including a contingency plan should this situation arise will protect all members of the ownership as personal situations change.

Similarly, it’s important to include a section in your contract should one of the joint owners pass away. A lawyer will be able to advise you on what to include, as this will be based on the type of deed. In some cases, if a co-owner passes, the property will transfer to the remaining owners. In others, the property may be passed down to any heirs they may have. Ironing out these details in advance of purchase will make sure there are no unpleasant surprises, especially during a challenging time.

Divide Responsibilities

If the same person manages all responsibilities at the cottage (such as booking snow plowing services in the winter or sourcing a plumber when a pipe is blocked), they’re going to get tired fast. 

Dividing responsibilities properly is a key concern for a co-ownership contract. Knowing everyone’s duties in advance will keep everyone on track while minimizing the possibility of one party member feeling overburdened and taken advantage of.

Allocate Time Periods

Time divisions can be altered annually. However, having a template in the legal contract — like, ‘each owner is entitled to two weeks of uninterrupted time in the summer months’ — will help keep everyone in check. 

It’s also worth noting cleaning duties. For example, you can put in writing that, ‘upon departure, the floors are to be vacuumed and mopped and beds stripped.’

Arrange an Annual Meet-up

Lastly, include a month to meet up every year to discuss if anyone has any concerns and to plan any renovations or changes you’d like to see at the cottage for the coming year.

Takeaways

Co-owning a recreational property is an excellent way to vacation with ease and effortlessly see friends and family, all while holding onto a financial asset. 

By covering major issues like finances, maintenance, and access in advance, you’re setting yourself, and your co-owners, up for many years of joy and a lifetime of memories.