Wanted: Fourth Golden Girl for home co-ownership arrangement

A quartet in a small town roughly an hour's drive from Toronto is looking for a new co-owner in their living arrangement that is reminiscent of the TV sitcom The Golden Girls.

And they have a year to pull it off.

A year might sound like a long time but given the current housing market conditions, finding the right buyer for the niche co-ownership lifestyle could be more difficult than one might think.

"We really want to find the right individual. You're buying into the ownership of a property so you definitely want to make sure you feel comfortable because you are living within the same home as three other people," Julie Curran, a sales representative with ​​RE/MAX Hallmark First Group Realty Ltd., told Yahoo Finance Canada in a phone interview.

"You're buying into real estate but you're really buying into a very unique lifestyle."

The current group of Golden Girls - Louise, Bev, Sue and Sandy - all in their early 70s and either widowed or divorced, were drawn to co-ownership for a variety of reasons.

It allows them to "age in place" for longer rather than move into a retirement home, gives them more control over their lifestyle, is more cost effective than other housing alternatives, and offers a higher level of companionship than what retirement communities might be able to provide.

Three of the four are the original owners and have lived together since 2016 in the 5,000-square-foot home that's been renovated to better suit a senior's needs, including a three-storey elevator and a lower-level suite for potential live-in help in the future.

Now that one of the owners is moving out, it's Curran's job to find a replacement. Their contract stipulates that if a new co-owner isn't found within one year, the entire house must be sold.

Fractional sales vs. traditional home sales

Fractional sales are much different from traditional home sales. Co-ownership involves multiple people pooling their resources to purchase a property that might otherwise be unaffordable for them individually. The purchasers can be different generations of a family, friends, or complete strangers.

Arguably, one of the most important aspects of co-ownership is the need for extremely detailed contracts that lay out all the ground rules of the house.

"We do have a substantial legal agreement that was our biggest expense of all in the beginning. It covers how one gets in, gets out, estate issues, rules and regulations, dispute mechanism, and even how one gets 'voted off the island', if necessary," said Bev, one of the original co-owners.

Fractional home sales also differ in terms of financing. Only a handful of mostly smaller financial institutions offer mortgages for co-owned properties and they usually have tougher conditions compared to traditional mortgages.

Usually, mortgages for co-owned properties have a higher interest rate and require a larger minimum downpayment, typically 20 to 35 per cent in many cases.

Finding the right buyer

The marketability of this fractional sale has been a challenge for Curran.

The $399,000 price point is attracting many first-time homebuyers, but finding financing is proving to be a major challenge for many of them.

The housing slowdown has also been challenging. Curran has had to drop the sale price from $435,000.

"We have definitely seen a slowdown in that and we've had to adjust our prices to reflect the change in the market," she said.

She adds that she's had serious inquiries but no potential candidates who are quite "there yet."

Another challenge buyers have run into is downsizing, since much of the home is already furnished, she says.

"All of these ladies, they all sold their own residential home to be able to buy into this," she said. "Three of them were widows, so they all owned their own home. They had a lot of equity in their homes."

Unlike traditional home sales, the current co-owners will play a part in selecting who the new buyer is. Sometimes, the women remain in the home while it's being shown to potential buyers to answer any basic questions about how the living arrangement works.

"Part of the offer process is that the other residents of the home are agreeable to the new candidate," Curran said.

"It could be a matter of them getting together and just having a coffee, to engage in conversation."

Co-ownership gaining popularity

As home prices have skyrocketed in recent years, alternative options such as co-ownership have been gaining popularity as a way to get a foot onto the property ladder.

In 2019, former Member of Provincial Parliament Lindsey Park introduced an amendment to the Ontario government's Planning Act, called Bill 69, the Golden Girls Act. The bill aimed to stop local politicians from enacting by-laws that would prevent seniors from entering into co-ownership housing agreements.

However, the government of Ontario website shows the bill never made it to the third reading and Park did not run again in the 2022 election.

As housing affordability erodes further, the idea of co-ownership could continue to become more mainstream.

"I think we're going to start seeing a lot more of it. With real estate prices being where they are, I think we're going to start seeing a lot of younger people looking at co-ownership as an opportunity to get them into the real estate market," Curran said.

"I know other clients of mine that have bought with their kids. The parents are living in the lower level and they travel in the wintertime but it's helping get their kids that are younger into the real estate market."

Making the co-ownership lifestyle work

The key to keeping the co-living arrangement harmonious is ensuring everyone knows, agrees with, and abides by the house rules.

"Our agreement includes specific rules about things like not holding garage sales without agreement - the kinds of things one sees in condominium agreements. As for day-to-day living, our main "rule" is to leave the shared areas tidy, something that isn't difficult with two dishwashers. We check with each other before scheduling overnight guests or larger social gatherings, that's about it," Louise, one of the co-owners, said via email.

All co-owners must also make set monthly payments to fund operating costs such as hydro, insurance, and property taxes and a monthly payment that goes into a contingency fund.

Each resident pays an additional $125 per week that goes towards groceries, restaurant outings and take-out meals.

According to the four women, the benefits of co-ownership are clear.

"Staying in my own home, with increasing expenses to do basic work, such as home maintenance, lawn care, housekeeping, etc. was already costing more every year, as were taxes, insurance and sundry other items. I was afraid of running out of money before I 'bit the dust,' so to speak, in trying to keep up my own home and there were accessibility issues with my home at that time," Bev said.

In the co-owned property, she says she's more secure financially.

"I know my pension will cover all my living expenses as long as I need it, and my equity in this house, even as a quarter share, is more than I had in my previously owned home that will carry my needs for care well into the future with some left for my children in the end," she said.

Michelle Zadikian is a senior reporter at Yahoo Finance Canada. Follow her on Twitter @m_zadikian.

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