As the first long weekend of the summer winds to a close, let’s stay in cottage-mode a while longer and delve into the nitty-gritty questions you need to consider before having a cottage agreement drafted. Start with the basics,
- If the cottage is not already owned, how should the purchase price be divided?
- How should title to the property be held? For example, who should be involved, owners and spouses or owners only? How should title be held among the various owners, as joint tenants with right of survivorship (last one alive owns it) or tenants-in-common (each person’s share passes on death as per the person’s will; if no will, according to provincial intestacy laws)?
Next, consider the ongoing operating costs, such as property taxes, utilities, heat, hydro, and telephone:
- How will such expenses be shared? Equally? Proportional with use?
- Should there be a joint bank account from which such expenses are paid?
- At which bank should the account be opened? Who should have signing authority?
- What should each party’s initial contribution be? What about future deposits?
- What happens if one owner does not contribute (or is unable to do so financially)?
- Should such operating funds be invested or just kept in an account with low or no interest? If interest does accrue, who is to report it?
Consider capital costs (major improvements):
- What will be the process for determining if and when capital improvements should be made?
- What will be the process for determining how much should be spent on each capital improvement and who should do the work?
- What if one owner wants an improvement and other(s) do not?
You may want to consider a schedule for periodic inspections of the cottage by all parties to determine if any repairs, maintenance, or capital improvements should be undertaken. This could be done semi-annually, for example, at the beginning and end of the cottage season.
Your agreement should also address insurance coverage for the cottage, especially coverage for liability claims.
Next week I’ll set out a further series of issues which cottage owners will want to consider before having a cottage agreement drafted.
Reproduction of this blog is permitted if the author is credited. If you have questions or if you would like more information, please call us at 613 836-9915. This blog is not intended to be legal advice but contains general information. Please consult a lawyer or other professional to determine how the information in this blog might apply to you.
Blog posts pre-dated December 1, 2015 were originally published under Neff Law Office Professional Corporation.