Each of us owns one quarter of the house under a tenants-in-common agreement. It took some time to draw up our legal agreement.
Tenants-in-common is a well established legal framework within Ontario. In this case however, a single owner has to be able to sell his or her share independently of the other owners. That requires a legal agreement to govern just how that will work.
Essentially, it covers how one gets in and out of the deal, and how major decisions (e.g. expenditure on a major renovation or repair) will be made and some general "house rules".
Getting in and out.....
The key piece is getting in and out. When one owner decides to sell his or her share and move on, it will be important that the remaining housemates like the new buyer. To balance that requirement versus the need to allow someone to get their equity out of the house in a reasonable timeframe, there is a 12 month period in which the seller tries to find an acceptable buyer at whatever price the seller can negotiate. If the remaining owners don't accept any of the proposed buyers in that timeframe, then they will have two options - buy that share themselves (one or more of the remaining owners) at fair market value - or sell the whole house. Determination of "fair market value" is spelled out in the agreement.
Selling the whole house would be seriously disrupting to all involved and so there is a big incentive to find a compatible buyer in the prescribed timeframe! But if that failsafe had to be invoked, we have little doubt that the house would sell quickly either as an awesome single family home or a perfectly located bed and breakfast.