The sweet benefits of a cottage co-ownership agreement
Working with family to share a cottage or cabin can make summer fun more economical.
Here are some ideas on keeping both your beloved property and relationships thriving.
family & relationships
BY moneytalk staff
May 2025
When Victoria Gibb-Carsley considers buying something for her family cottage located near Perth Ont., she keeps in mind a simple rule: If the item costs more than $500, her brother and sister need to sign off on the purchase. They rarely say no, she says, but the fact that the siblings have rules ensures no one complains about the cost of a new mattress in a guest room or a chaise lounge on the deck.
Draw up a co-ownership agreement
IMAGE: INNA GERTSBERG
The hype around semiconductors has largely been concentrated around a few key players that make chips for AI-related activities. But the industry is larger than you may think and is made up of other subsectors and businesses of various sizes.
There are companies that make semiconductors for the industrial, automotive and consumer tech industries, and others that focus on the software used to design AI-specific semiconductors. The companies that work in more traditional industries are still growing, but not as quickly as ones in the AI industry, explains McKendry: “These play on general economic growth, but it’s not gangbuster growth.”
Research and development are important components to the industry, he adds, with the winners typically having large R&D budgets to help keep up with the rapid demand for newer and better products.
Disclaimer
Even when agreements set out clear expectations, power isn’t necessarily equally shared. One sibling may wield more influence in decision-making, or one friend may have more money and become frustrated with another’s reluctance to invest in the property.
Swan cites the example of a co-ownership arrangement she knew of involving two friends with different financial situations. One had plenty of money and paid for their half of the property with cash, while the other had to mortgage their home to pay for theirs. “That created an unequal relationship,” she says. “When the one owner wanted to do some improvements — it was very difficult for the other to participate and there was resentment.”
Is there more to the sector beyond the interest in AI?
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Just because your co-owner is a sibling or a friend doesn’t mean you’ll want the same things. So, it’s important to talk through the terms of your partnership and document them in a co-ownership agreement. “You’re going to be sharing an extremely valuable asset, and that requires some structure,” Swan says. “You have to approach it as if it’s a business transaction.”
Co-ownership agreements can touch on a broad range of things, and can include everything from how much of the property each person owns and how taxes and other expenses will get paid to who’s allowed to invite guests. It should also take future cottage-related purchases into consideration. “What if someone buys something? A boat? Patio furniture? Who gets to use it? And if that patio furniture breaks, who pays for it?”
For siblings inheriting a property directly from their parents, a co-ownership agreement may be the first time to recognize how much work, money and discussion are involved with a property. If one sibling's family is used to dropping in on summer long weekends to have some fun, it serves as a proper introduction for what's ahead — and perhaps a time to bow out of the agreement.
Gibb-Carsley notes maintenance responsibilities are another issue she and her siblings talked through. They decided she’d look after ongoing repairs, since she lives closest to the cottage and uses it the most often. “We’ve never had a problem,” she says. “But we really make a point of communicating.”
“We want to make sure there are no misunderstandings,” Gibb-Carsley explains. “We really talked things through before we took over the cottage from our parents. And we still do.”
Georgia Swan, Vice-President, Tax and Estate Planner at TD Wealth, wishes more families would take that approach. While there are benefits to sharing expenses and maintenance, co-ownership isn’t always easy, she says, no matter how well a group of friends or family members get along. Challenges like tax implications, scheduling conflicts and even maintenance decisions like who cuts the grass can make or break the experience.
The issue can be particularly fraught when the family's recreational property — a camp, cottage, chalet or cabin — is passed on to the next generation. “Unfortunately, because of all of that emotional baggage, it’s sometimes difficult to get a reasonable agreement between people,” she explains. “I’ve seen more families torn apart because of the family cottage than almost anything else.”
Swan says she’s noticed an increasing number of people are owning properties together. Many go this route because of the high cost of real estate: The average price for a recreational property in Canada can range from $275,000 to $2 million depending on the location, size and condition. Other owners are taking over properties previously held by aging or deceased family members.1
Choose your co-owners wisely
Set clear communication rules
While it may be tempting to bring up issues at a family dinner or a night out with your co-owner, resist the temptation. They may feel ambushed by a complaint and ill-prepared to talk about it — especially in a social situation. It’s a better idea to plan regular meetings to discuss ownership issues, says Swan.
The fact that co-ownership is a business arrangement cannot be emphasized enough, Swan says. While some people may want to save money by negotiating a kitchen table deal, Swan says you'll probably get what you pay for. Co-ownership agreements are legal documents which can be quite complex depending on the people involved and their respective contributions..
For instance, co-ownership agreements often include clauses for various scenarios: what happens if one party dies, becomes incompetent, goes bankrupt or has other creditor issues, gets divorced or simply no longer wishes to own the property. As such, this agreement will often have a significant impact on other areas of each owner's life, including their estate planning.
What should go into a cottage co-ownership agreement?
*Not an exhaustive list
1. Paul Brent, The perils of passing down the family cottage, June 3, 2021, accessed April 2, 2025 www.theglobeandmail.com/investing/article-the-perils-of-passing-down-the-family-cottage/
2. Anne-Elise Cugliari Allegritti, "Canadians are combining their buying power and co-owning homes with family and friends to combat unaffordability," Royal LePage Blog, August 31, 2023, accessed January 29, 2025, blog.royallepage.ca/canadians-are-combining-their-buying-power-and-co-owning-homes-with-family-and-friends-to-combat-unaffordability/
SOURCES
Most importantly, Swan says, the agreement should outline how disputes will be handled between owners. For instance, does the owner with the greater share of the property get final say or does everyone have an equal seat at the table? She says co-owners need to consider these sorts of questions because of the relationship's legal nature: If the owners have a dispute they cannot mediate or negotiate to resolution, there may be no other recourse but to go to court. If the ownership is between friends, a court case could easily spell the end of that friendship. Similarly, suing your relatives, siblings or parents will end any remaining family harmony.
In summary, Swan says that co-ownership agreements should be prepared by an experienced lawyer and treated with the seriousness they deserve. She adds that each owner should also have their own lawyer review the agreement and advise on it.
Pro-active co-owners think beyond their current working arrangement and consider what will happen when someone dies or no longer wants their share of the property. If someone else inherits half a cottage, the old owners could find themselves suddenly sharing a cottage with a reluctant partner who doesn’t see the need for a new floor in the living room or may not even want a stake in the property. While someone can inherit a property, the co-ownership agreement does not carry over and a new one must be redrawn.
Succession planning is essential, Swan explains. If you’re thinking about leaving property to your children, talk to them and make sure they want it. And if you’re entering into a co-ownership agreement with others, it’s worth including a buyout option so shares don’t end up getting passed on to beneficiaries who don’t appreciate the property.
Make a succession plan
If you’re passing on property to your children or other family members, keep in mind the tax implications. Your kids may not be paying anything for a property, but, for tax purposes, the transaction will be viewed as a purchase at fair market value, and capital gains will apply. Make sure your heirs know what the tax situation will be when you die.
Swan cautions that tax issues can be complex and may come with unforeseen consequences, including government clawbacks of Old Age Security benefits. So, it’s best to talk to an advisor about an overall financial plan before making any decisions.
Consider taxes and capital gains
In the end, Swan says, successful co-ownership requires more than an understanding of your partners and the terms of your agreement. You also need to understand yourself. “You’re going to have to separate the business from the personal,” she says, “so be very careful. Can you separate the property from the emotional connection you have with the other owner?”
To make an informed decision, it’s best to speak with an advisor who can talk through the issues relevant to your situation. Approaching co-ownership thoughtfully could help ensure your recreational property doesn’t come with headaches and unnecessary expenses. “It’s an asset,” Swan says, “and it deserves to be treated and planned for like any other business arrangement.”
Separate yourself from your emotions
Vice-President Tax and Estate Planner at TD Wealth
Georgia Swan
You’re going to be sharing an extremely valuable asset, and that requires some structure.
• Document regular maintenance, who pays the bills, when and how.
• Establish who can use the property and when.
• Develop rules about decision-making and conflict resolution ideas.
• Discuss what happens when a co-owner sells or dies.
• Get legal advice and have the document reviewed by a lawyer. *
What should go into a cottage co-ownership agreement?
It's a growing issue. A 2023 survey from Royal LePage found that 6% of Canadian homeowners co-own a property with someone other than a spouse, with 76% saying that affordability was the motivating factor for joint ownership.2 To help understand these challenges, Swan highlights the key issues to consider and shares some ideas for how to navigate them.
April 2025
High Net Worth Planner,
TD Wealth
Tannis Dawson
Try not to make rash decisions — your future goals are why you made a long-term plan in the first place.
*Not an exhaustive list
While it may be tempting to bring up issues at a family dinner or a night out with your co-owner, resist the temptation. They may feel ambushed by a complaint and ill-prepared to talk about it — especially in a social situation. It’s a better idea to plan regular meetings to discuss ownership issues, says Swan.
The fact that co-ownership is a business arrangement cannot be emphasized enough, Swan says. While some people may want to save money by negotiating a kitchen table deal, Swan says you'll probably get what you pay for. Co-ownership agreements are legal documents which can be quite complex depending on the people involved and their respective contributions..
For instance, co-ownership agreements often include clauses for various scenarios: what happens if one party dies, becomes incompetent, goes bankrupt or has other creditor issues, gets divorced or simply no longer wishes to own the property. As such, this agreement will often have a significant impact on other areas of each owner's life, including their estate planning.
Pro-active co-owners think beyond their current working arrangement and consider what will happen when someone dies or no longer wants their share of the property. If someone else inherits half a cottage, the old owners could find themselves suddenly sharing a cottage with a reluctant partner who doesn’t see the need for a new floor in the living room or may not even want a stake in the property. While someone can inherit a property, the co-ownership agreement does not carry over and a new one must be redrawn.
Succession planning is essential, Swan explains. If you’re thinking about leaving property to your children, talk to them and make sure they want it. And if you’re entering into a co-ownership agreement with others, it’s worth including a buyout option so shares don’t end up getting passed on to beneficiaries who don’t appreciate the property.
Make a succession plan
If you’re passing on property to your children or other family members, keep in mind the tax implications. Your kids may not be paying anything for a property, but, for tax purposes, the transaction will be viewed as a purchase at fair market value, and capital gains will apply. Make sure your heirs know what the tax situation will be when you die.
Swan cautions that tax issues can be complex and may come with unforeseen consequences, including government clawbacks of Old Age Security benefits. So, it’s best to talk to an advisor about an overall financial plan before making any decisions.
Consider taxes and capital gains
High Net Worth Planner,
TD Wealth
Tannis Dawson
Try not to make rash decisions — your future goals are why you made a long-term plan in the first place.
At a basic level, a semiconductor, also commonly called a "chip," is a material that regulates the flow of electricity. It does this by being both an insulator — something that stops the flow of electricity — and a conductor, which facilitates it.
Manufacturing semiconductors typically involves a number of complex steps during which hundreds of copies of an integrated circuit are formed on a single wafer that is primarily made of silicon.2 The final wafer can be between 0.1 millimetres and 1.5 millimetres — similar in thickness to a credit card or a single Shreddie.
The hype around semiconductors has largely been concentrated around a few key players that make chips for AI-related activities. But the industry is larger than you may think and is made up of other subsectors and businesses of various sizes.
There are companies that make semiconductors for the industrial, automotive and consumer tech industries, and others that focus on the software used to design AI-specific semiconductors. The companies that work in more traditional industries are still growing, but not as quickly as ones in the AI industry, explains McKendry: “These play on general economic growth, but it’s not gangbuster growth.”
Research and development are important components to the industry, he adds, with the winners typically having large R&D budgets to help keep up with the rapid demand for newer and better products.
Choose your co-owners wisely
Document regular maintenance, who pays the bills, when and how.
Establish who can use the property and when.
Develop rules about decision-making and conflict resolution ideas.
Discuss what happens when a co-owner sells or dies.
Get legal advice and have the document reviewed by a lawyer. *
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If you’re passing on property to your children or other family members, keep in mind the tax implications. Your kids may not be paying anything for a property, but, for tax purposes, the transaction will be viewed as a purchase at fair market value, and capital gains will apply. Make sure your heirs know what the tax situation will be when you die.
Swan cautions that tax issues can be complex and may come with unforeseen consequences, including government clawbacks of Old Age Security benefits. So, it’s best to talk to an advisor about an overall financial plan before making any decisions.
Consider taxes and capital gains